U.S. Budget Deficit Revised Upward to $1.2 Trillion for 2012
The U.S. budget deficit this year will be larger than projected while health-care costs aren’t growing as quickly as anticipated, according to the federal government.
The increase is largely attributable to a reduction in workers’ payroll taxes for the rest of 2012, the cost of which lawmakers agreed to add to the federal deficit.
The revised estimate means the government will run a trillion-dollar deficit for the fourth consecutive year, though the gap will narrow slightly from last year’s $1.3 trillion.
“The fundamental story about the federal budget has not changed: Although the deficit is starting to shrink, it remains very large by historical standards,” the agency said yesterday in a report.
House Republicans are preparing to unveil their fiscal year 2013 budget plan next week. A group of Republicans are pushing for an election-year budget fight by demanding big cuts in the spending bills needed to fund federal agencies for the fiscal year that begins Oct. 1.
That could raise the specter of a government shutdown shortly before voters head to the polls in November because Democrats say it would upend a budget deal struck last year with the administration.
“I guess they love government shutdowns, or at least the threat of them,” Senate Majority Leader Harry Reid, a Nevada Democrat, told reporters yesterday. “Our economy cannot afford another one of these senseless demonstrations by the Tea party. The American people are sick of these manufactured crises.”
The CBO also said it expects the coverage provisions of President Barack Obama’s health-care overhaul to cost about $50 billion less than anticipated, in part because health-care costs aren’t increasing as quickly as anticipated.
According to the report, private-insurance premiums rose by 8.4 percent annually between 2000 and 2005. In the subsequent five years, it said, costs slowed, increasing by 5.3 percent annually. In 2010, the CBO said, costs increased by 3.7 percent.
That prompted the agency to ratchet down its assumptions about future costs, with premiums projected to increase by 5.7 percent annually over the next decade.
It also predicted the health-care overhaul won’t cover as many people as anticipated, forecasting that 93 percent of Americans would have coverage by 2016, down from the 95 percent it had previously predicted. That’s partly because budget forecasters are assuming the economy will grow more slowly than anticipated, which means more people would be out of work and without insurance.
This year’s larger deficit is primarily the result of a vote last month to extend an expiring 2-percentage-point cut in Social Security taxes for the rest of 2012. Lawmakers couldn’t agree on what to cut in the budget to make room for the tax cut, so they added the nearly $100 billion cost to the deficit.
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