Paul Krugman: The budget office predicts that this year’s federal deficit will be just 2.8 percent of G.D.P., down from 9.8 percent in 2009. We’re still running a deficit [which] means federal debt continues to grow, but the economy is growing too, so the ratio of debt to G.D.P. [is expected] to remain flat for the next decade. There has been a dramatic slowdown in the growth of health care costs, [so] despite aging, debt in 2039 is projected to be no higher than the debt America had at the end of World War II. Interest rates [will] remain fairly low, almost eliminating the risk of a debt spiral, in which the cost of servicing debt drives debt even higher. To avoid any rise in the debt ratio, stabilizing the ratio of debt to G.D.P. at its current level would require spending cuts and/or tax hikes of 1.2 percent of G.D.P. Politically, that would be hard given total Republican opposition to [Obama], but in economic terms it wouldn’t require any fundamental change in our major social programs. In short, the debt apocalypse has been called off.
Posted on: Mon, 21 Jul 2014 11:01:27 +0000
Trending Topics
Recently Viewed Topics
© 2015