New U.S. budget deficit estimates due on Tuesday will likely show a rapidly improving fiscal picture over the next few years, contributing to a waning appetite in Washington for further budget cutting.
The Congressional Budget Office is expected to revise downward its deficit forecasts over the next 10 years. Many analysts believe that major deficit reduction is highly unlikely before President Barack Obama leaves office in 2017, and lower deficit forecasts could reinforce that view.
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The CBO in May last year forecast a $560 billion deficit for fiscal 2014, which ends September 30. That matches the median estimate from 29 private economist spolled by Reuters in January, but some of those forecasts came in as low as $400 billion.
The fiscal 2013 U.S. deficit fell to $680 billion after four straight years of $1 trillion-plus deficits.
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An improving economy coupled with strong stock market gains and corporate profits last year are expected to boost spring tax collections as Afghanistan war costs and unemployment-related outlays wane. A recovering housing market also may increase contributions from government-controlled mortgage finance firms Fannie Mae and Freddie Mac.
The new budget estimates also may reflect slower growth in health care costs, which could reduce projected costs for big federal programs such as the Medicare health program for older Americans.