|
| US fiscal deficit to touch $9.05 trillion in 10 yrs |
| Press Trust of India / Washington Aug 26, 2009, 17:26 IST |
|
The US fiscal deficit is projected to touch a staggering $9.05 trillion in the next ten years, with the government unleashing massive public spending measures to bolster the recession-hit economy.
Moreover, the deficit for the current year is expected to be at $1.58 trillion, the highest since World War II.
"Over the next 10 years, the net impact is to add $2 trillion to the projected deficit, compared to our last projection made based on February's economic assumptions.
"That brings the projected 10-year deficit for 2010-2019 to $9.05 trillion," US Office of Management and Budget has said.
Grappling with the worst ever economic downturn in nearly 80 years, spending programmes, including unemployment insurance and food stamps, are anticipated to increase while the revenues could slow down.
"Although these effects help to ameliorate the economic downturn by stimulating demand, they also lead to higher medium-term deficits both directly and indirectly (through higher interest costs on a higher level of public debt)," OMB said in a statement yesterday.
Meanwhile, the fiscal deficit for this year is projected to be $1.58 trillion — about 11.2 per cent of GDP.
"The federal budget deficit for 2009 will total $1.6 trillion, which, at 11.2 per cent of gross domestic product (GDP), will be the highest since World War II," US Congressional Budget Office (CBO) said in a separate statement yesterday.
It noted that as the economy recovers, if current laws and policies remained in place, the deficit would shrink. The same would remain above $500 billion per year, or more than three per cent of GDP, throughout the 2010–2019 period.
"... That debt, which was as low as 33 per cent of GDP in 2001, would reach an estimated 54 per cent of GDP this year and grow to 68 per cent of GDP by 2019," CBO said.
According to the OMB, one of the key drivers for long-term deficits is healthcare costs. The administration cannot put on a fiscally sustainable path without slowing the rate of healthcare cost growth in the long run, it said.
"That is why the administration is insistent that health care reform not only be deficit neutral over the next ten years, but also incorporate changes that will help reduce the deficit thereafter," it added.
|
|
|
|
|
|
|
|
|
|
 Read Business news in |  |
|
|
|
|
|
|
Advertisements |
|
|
|
|
|
|
|
|
|
Content Guide
