Federal deficit forecast to hit lowest level of Obama presidency

WASHINGTON — Congress’ official budget analyst projected Tuesday that this year’s federal deficit will drop to $426 billion, the lowest shortfall of Barack Obama’s presidency.

But the annual summertime update by the nonpartisan Congressional Budget Office also contained words of warning. It cautioned that without action by lawmakers, annual federal deficits will surge upward again later this decade and spike back above $1 trillion in 2025.

The budget office released its figures two weeks before lawmakers return to the Capitol from a summer break, steering toward a budget clash. The Republican-led Congress has approved a blueprint that uses spending curbs on Medicare, Medicaid and other programs to claim a balanced budget in a decade, a plan that Democrats have opposed as harsh and unrealistic.

Tuesday’s report offered political ammunition to both sides. Democrats are likely to argue that it shows planned GOP budget cuts are unnecessary, while the GOP is expected to say it demonstrates that action to tame deficits is needed now.

As long as the GOP controls Congress and Obama remains in office, the odds for a major deficit-reduction deal seem slim.

In March, the budget office projected a $486 billion deficit for the current fiscal year, which ends Sept. 30.

The 2014 budget deficit was $485 billion.