Connect to share and comment

US growth to pick up to 3.2% in 2014: Obama budget

PlacardEnlarge
(Globalpost/GlobalPost)

President Barack Obama's fiscal 2014 budget proposal released Wednesday sees US economic growth picking up to 3.2 percent next year from 2.3 percent this year.

The White House's $3.78 trillion spending blueprint for the fiscal year beginning October 1 also assumes that unemployment will average 7.2 percent next year, down from the current 7.6 percent.

The budget, a modest 2.5 percent increase in spending over the current year, foresees the US deficit falling to $744 billion, compared to a projected $973 billion shortfall in the current year.

If that were achieved, it would be represent a cut of nearly half to the annual fiscal gap in five years, and bring the country's deficit down to 4.4 percent of gross domestic product from 6.0 percent in 2013.

Over a longer term, the budget foresees the annual deficit holding at around $500 billion through 2022, and falling to a manageable 2.1 percent of GDP by that year.

Revenues are expected to climb 11.9 percent to $3.03 trillion in fiscal 2014, helped both by the impact of higher growth and the White House's proposals to eliminate tax loopholes and special benefits enjoyed by companies and wealthy taxpayers.

"The president is committed to continuing to reduce the deficit in a balanced way," the White House said in a statement.

"He is determined to do this in a way that replaces the economically damaging across-the-board cuts of sequestration with smart, targeted efforts to cut wasteful spending, strengthen entitlements, and eliminate loopholes for the wealthiest through tax reform."

The budget's longer-term forecast suggests it sees continued challenges to firing up the economy, with the unemployment rate only falling below 6.0 percent in 2017.

Nevertheless, Republicans in Congress are expected to reject the budget and push for more cuts in disbursements.

Republican House Speaker John Boehner assailed the plan as failing to reach a balanced budget over the next next decade, a standard which would require more spending reductions.

"House Republicans passed a balanced budget that will help foster a healthier economy and to help create jobs. Unfortunately, the president's budget never comes to balance. Every family has to balance its budget, Washington should as well," he said.

But the White House suggested it was not looking to negotiate.

"We don't view this budget as a starting point. This is an offer where the president came more than half way towards the Republicans in an attempt to get a fiscal deal," said a senior White House official.

pmh/dw

http://www.globalpost.com/dispatch/news/afp/130410/us-growth-pick-32-2014-obama-budget-1