© Reuters. FILE PHOTO: U.S. President Joe Biden speaks about his plans for continued student debt relief after a U.S. Supreme Court decision blocking his plan to cancel $430 billion in student loan debt, at the White House in Washington, U.S. June 30, 2023. REUTERS/
By David Lawder
WASHINGTON (Reuters) -The White House on Friday revised its fiscal 2023 U.S. budget deficit forecast to $1.543 trillion, a decrease of $26 billion from its March budget forecast, due largely to a major reduction in outlays after the U.S. Supreme Court struck down President Joe Biden’s student loan forgiveness program.
The Office of Management and Budget said in its Mid-Session Review update that the student loan decision would reduce outlays by $259 billion, offset partly by an increase in spending due to rule changes for income-driven repayments.
The Biden administration had taken a pre-emptive charge of $430 billion against fiscal 2022 budget results, increasing the deficit that year. The $259 billion reduction in outlays only partly reverses those costs after the COVID-19 general student loan repayment moratorium was extended through September when interest starts to accrue.
The reduction was offset by increases in 2023 outlays for Social Security and Medicare and the Federal Deposit Insurance Corp, while decreases for the unemployment compensation and the Child Tax Credit categories led to a net reduction in outlays of $242 billion in 2023.
Estimates for clean energy tax credit costs associated with Biden’s Inflation Reduction Act were $4 billion higher than previously forecast for 2023, and $120 billion higher over a decade.
The reduction in outlays for 2023 was substantially offset by a $215 billion net reduction in receipts, mostly due to lower collections to date and technical revisions based on new tax reporting data, the budget office said.
Economic forecast changes had little impact on the budget forecast revisions, increasing 2023 receipts by only $4 billion compared to March forecasts. Based on data as of June 1, OMB left unchanged its forecast for 2023 U.S. real GDP growth of 0.4%, while decreasing its 2024 growth forecast to 1.8% from 2.1%
But OMB forecast lower unemployment in 2023 at 3.8% compared to 4.3% in March, while it forecast 4.4% unemployment in 2024, down from 4.6% in March.
This story originally appeared on Investing
