President Barack Obama's budget office on Friday revised downward its previous forecasts for economic growth in 2012 and 2013 and projected a $1.211 trillion deficit through the end of the year, slightly down from earlier predictions.

"The economy is not growing fast enough and there are still too many people out of work. Most troubling, the pace of improvement in the labor market slowed in the second quarter of this year," according to the Mid-Session Review (MSR) from the Office of Management and Budget (OMB).

Obama's hopes for re-election hang on voters' perceptions of how he has handled the economy, which is still sputtering three and a half years after he took office. Polls show Republican challenger Mitt Romney is seen as a better candidate for creating jobs, though the president outscores him on which candidate would be a better champion for the middle class.

The MSR cut projected growth from 2.7 percent to 2.3 percent in 2012 and 2.7 percent from 3 percent relative to its previous forecasts in February. That came after the Commerce Department reported that the gross domestic product rose at a 1.5 percent annualized rate in the second quarter of the year, a tepid pace. On the deficit, the new $1.211 trillion figure was below February forecasts of $1.327 trillion. But the MSR upped its estimate for the deficit in 2013 from $901 billion to $991 billion. Republicans led by Romney have cited the country's swelling national debt—now at nearly $16 trillion—as a symptom of Obama's mismanagement of the economy. The Democratic incumbent has emphasized that the 2007-2008 economic meltdown is the chief cause of the rising tide of red ink.

In a post on the official White House blog, acting Office of Management and Budget Director Jeffrey Zients said the slightly improved picture between February and July "reflects lower-than-expected spending, partially offset by lower-than-expected receipts."

Zients also fired a shot in the official Washington war over the "sequester"—automatic cuts to social programs and national security spending, adopted by Congress and signed by the president, and triggered by last year's failure to find a wide-ranging deficit-reduction plan—by saying lawmakers "can and must enact a comprehensive and balanced deficit reduction package" that would be "along the lines" of Obama's calls for higher taxes on the wealthy as well as "measures to strengthen the near-term economy and create jobs."

"With more than five months remaining before the sequestration must be initiated, Congress has ample time to act. The Administration stands ready to work with Congress to get the job done," he said.