CBO projects deficit of $426 billion for 2015

The budget deficit for 2015 is expected to drop to $426 billion, according to a report released Tuesday by the nonpartisan Congressional Budget Office (CBO).

If the deficit drops to that level by the end of the fiscal year on Sept. 30, that would mark an eight-year low for the government’s annual budget shortfalls.

{mosads}The CBO’s latest deficit estimate is $59 billion lower than last year’s official deficit and would represent 2.4 percent of gross domestic product (GDP). The new figure is also lower than the $486 billion deficit the agency projected for 2015 in a similar report in March.

The lower projection stems from higher-than-expected corporate and individual tax receipts, CBO said.

Congress’s budget scorekeeper also projected some good news for the economy after it experienced slow growth in the first quarter.

The economy is projected to expand modestly this year by 2 percent, by 3.1 percent in 2016 and by 2.7 percent in 2017. After that, it is expected to expand at a more moderate pace, according to the report.
 
Meanwhile, debt is expected to equal roughly 74 percent of GDP by the end of fiscal 2015, CBO said, and is still projected to rise over the next decade if current laws remain unchanged.

At the same time, the CBO said its updated projections for the economy, such as lower projected interest rates, produce the largest changes over the next 10 years. The agency reduced its estimated cumulative deficit between 2015 and 2016 by $769 billion.

While the CBO laid out these specific projections, the agency also warned that there is a lot of uncertainty about the economy’s future.

The budget office warned that its estimates could be too pessimistic and said consumer spending could increase faster than expected.

On the other hand, CBO also warned that the projections could be too optimistic, because if businesses don’t respond to tighter labor markets by increasing wages and benefits, consumer spending could increase slowly.