Showing posts with label interest rates. Show all posts
Showing posts with label interest rates. Show all posts

January 2, 2023

Looming Fiscal Disaster


While the conclusion is that a combination of dramatic tax increases and/or dramatic spending cuts are absolutely going to happen, there is a third factor that is also almost certain: Inflation which reduces the relative value of the debt and means higher interest rates. 

An analysis from economists at the University of Pennsylvania's Wharton School found that American fiscal policy is in "permanent imbalance as current debt plus projected future spending outstrips future tax revenue," demanding a substantial decrease in expenditures or a substantial rise in revenues.

The economists forecasted that the fiscal imbalance would equal 7% of the present value of all future gross domestic product over the next 75 years. Restoring order to the federal budget would require across-the-board cuts to programs such as Social Security, Medicare, and Medicaid, across-the-board increases to payroll taxes, individual taxes, and business taxes, or some combination of tax hikes and spending cuts.


https://budgetmodel.wharton.upenn.edu/issues/2022/12/19/long-term-implications-of-current-budget-policies

Ineffectual

US President Joe Biden told Prime Minister Benjamin Netanyahu that  the US will not aid any Israeli counterattack on Iran , US media report,...