UPDATE 2-U.S. deficit down in first half 2010 – report

(Updates with White House comment)

WASHINGTON, April 12 (BestGrowthStock) – The U.S. federal budget
deficit in the first half of fiscal 2010 is down 8 percent from
the same period a year ago, the Washington Post reported on
Monday.

Citing senior Obama administration officials, the
Washington Post said in an article posted on its website the
smaller deficit was due to higher tax revenue and lower than
projected spending to bail out the financial system.

The newspaper said if the trend continued for the rest of
the year it would mean the annual deficit would be $1.3
trillion — about $300 billion less than the administration’s
projection two months ago for 2010.

The Treasury earlier released a statement that showed a
cumulative $181 billion of money disbursed to stabilize the
financial system had been repaid through March, and noted that
estimates for the program’s final cost were falling.

“While the positive news is welcome, it is premature and
irresponsible to be making deficit projections for the fiscal
year as a whole,” said Kenneth Baer, spokesman for the White
House Office of Management and Budget.

“The Administration will issue revised deficit numbers as
part of the Mid-Session Review this summer,” Baer said.

No official statement on the deficit is scheduled until the
release of a late-summer review. The Post said the officials
spoke on condition of anonymity because the findings are
preliminary and the results for the full year might not turn
out so well.

The White House has forecast a $1.6 trillion budget deficit
this year, or about 10.6 percent of gross domestic product, the
highest level since World War Two.

Republicans are expected to use the ballooning budget
deficits as a rallying cry in mid-term elections in November as
they try to unseat Democrats by blaming them for running up
record deficits.

In February President Barack Obama named a bipartisan panel
to tackle exploding budget deficits and promised it broad
leeway to recommend ways to put the country on a path to fiscal
responsibility.

He asked the commission to come up with a strategy to
balance the budget, excluding interest payments, by 2015.

The Washington Post story said the officials “expressed
cautious optimism” about the figures but noted that the outlook
remains uncertain.

The story said a senior administration official
acknowledged that the lower deficit number would not
substantially ease the budget problems facing the government.

“But the favorable trend could allow Democrats to say they
have turned the corner, and the number is one they would want
to highlight for voters souring on Obama because of the
government’s red ink,” the newspaper said.

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(Reporting by Deborah Charles, Editing by Peter Cooney and
Sandra Maler)

UPDATE 2-U.S. deficit down in first half 2010 – report