OMB Mid-Session Review shows slight improvement in the FY2010 deficit

////OMB Mid-Session Review shows slight improvement in the FY2010 deficit

OMB Mid-Session Review shows slight improvement in the FY2010 deficit

The FY2010 federal deficit will not be quite as large as projected in February, according to the Office of Management and Budget (OMB).  In its annual Mid-Session Review of the budget and the administration’s economic projections, OMB now expects the FY2010 deficit to be $1.416 trillion, about $85 billion less than it projected when the FY2011 budget was released.  The lower deficit is due mostly to lower estimated expenditures in FY2010.  However, OMB expects deficits in FY21012 through FY2015 to worsen slightly as revenues do not reach previous projected levels due to continued sluggish economic recovery.  Looking into the future, OMB estimates that the federal deficit will average about $800 billion per year  from FY2016 to FY2020.  However, by FY2020 it will return to the FY2012 level of $900 billion as spending (primarily for mandatory programs such as Medicare, Medicaid, and unemployment compensation) increases and revenue growth shows little change.  OMB does point out that as a percentage of Gross Domestic Product (GDP), the deficit will decline from its post-WWII high of 10 percent in FY2010 to less than 4 percent by FY2014.  At the G-20 economic summit in Toronto in June, the administration committed to reducing the deficit as a percent of GDP by one-half by FY2013.

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