(Bloomberg) — The Biden administration revised its budget projections over the next decade, offering a more optimistic outlook for deficits than it did just three months ago based on rosier expectations for economic growth.
The White House now forecasts the economy will expand 7.1% this year, compared to a May forecast of 5.2%, and will average 2.2% annual growth over the next decade, compared with 2% previously projected, according to figures released Friday. The Mid-Session review, a document prepared for Congress, reports realized and expected changes in federal government spending and revenue.
The higher growth projections, combined with additional assumptions about the impact of the president’s economic agenda that weren’t previously incorporated, resulted in a $555 billion smaller deficit projection for the 2021 fiscal year, ending next month. For the following decade, the White House cut its deficit forecast by another $684 billion.
The new calculations are likely to become part of President Joe Biden’s sales pitch to Congress as he tries to coax lawmakers to pass his $4.1 trillion economic agenda. That includes the $550 billion infrastructure bill that has already cleared the Senate, and a $3.5 trillion budget package that proposes long-term investments in child care, education and other parts of the safety net.
The report “underscores the importance of passing and implementing both the Infrastructure Investment and Jobs Act and the president’s Build Back Better agenda,” Shalanda Young, acting White House budget director, said in a blog post accompanying the report.
Getting the long-term agenda through Congress will require the votes of moderate Democratic senators including Joe Manchin of West Virginia and Kyrsten Sinema of Arizona, who have both signaled that $3.5 trillion is too large for them to support.
Read more: Taxes on Rich Test Democrats’ Unity on Biden Economic Agenda
The updated economic projections “reflect both better-than-expected economic performance in 2021 and a more complete analysis of the impact of the president’s policies,” the report said.
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