(Adds details from White House report)
By David Lawder
WASHINGTON, July 14 (Reuters) - The White House on Tuesday slashed its fiscal 2015 deficit forecast to $455 billion, down $128 billion from its last estimate in February, due to new calculations of higher revenues and lower spending.
The Mid-Session Review budget update shows that the White House is now expecting real gross domestic product to rise by just 2.0 percent during calendar 2015. This is down from 3.0 percent estimated in February based on data collected before severe winter weather ground the economy largely to a halt in the first quarter.
The White House also reduced its fiscal 2016 deficit estimate by $45 billion to $429 billion, or 2.3 percent of gross domestic product. The deficit peaked in 2009 amid a deep recession at $1.41 trillion, or 9.8 percent of GDP.
The reductions stem from an increased rate of revenue collection and technical revisions based on recent tax reporting data, partially offset by the weaker economic forecast, which is now largely in line with private sector forecasts.
In total, the White House increased fiscal 2015 revenue estimates by $72 billion from the February forecast, while the spending estimates fell by $56 billion, largely due to slower-than-expected outlays across a range of programs.
These include a $7 billion reduction in Social Security because fewer than expected younger beneficiaries are drawing benefits. The White House now projects an additional $229 billion reduction in Social Security spending over the next 10 years because of new, lower inflation assumptions that will slow cost-of-living increases.
The White House’s new $455 billion fiscal 2015 deficit estimate is now below the $486 billion gap forecast by the Congressional Budget Office in March. CBO is expected to update its forecast in August.
The White House’s improved budget forecast comes as Congress faces a contentious budget debate this autumn over funding for the new fiscal year starting on Oct. 1 and an increase in the federal debt limit that will be needed a few weeks later.
The report did not provide any estimates on when the U.S. Treasury is expected to exhaust its remaining borrowing capacity under special cash management measures.
Reporting by David Lawder; Editing by Sandra Maler and Eric Beech