26 Sep 2013
Is the US too big to fail? The debt deficit debate…
FXstreet.com (Chicago) – Earlier this week, the Congressional Budget Office said the US will need to cut $2 trillion over the next 10 years to stabilize the debt warning inaction will trigger another financial collapse. Ballooing to 100% of the country’s economic output in 25 years, the CBO’s outlook is rather pessimist. Worsening the urgency to do something, politicians in Washington cannot agree on what is best for the nation and continue arguing about short-term interests.
Talk > Action?
CBO director Elmendorf added “The bottom line remains the same as it was last year. The federal budget is on a course that cannot be sustained indefinitely” and provided estimates explaining 4% of the country’s GDP is destined to pay the deficit with about 3.5% of GDP by 2023 and 6.5% by 2038 if no tax or spending changes are made.
Washington’s debate: the finger pointing game?
Leading the Republicans, the House Budget Committee Chairman Paul Ryan stated “the report reiterates the obvious: government spending, especially on health care, is driving our debt. And Obamacare will not solve the problem. The law was a costly mistake” blaming all US debt deficit to the current US President, Barack Obama. Retaliating, the top Democrat at HBC Chris Van Hollen replied saying that Republicans are “threatening to shut down the government” but acknowledged it may be a good idea to cut off deficits.
What are the deadlines?
In order to avoid government shutdown, Congress and the White House have to come to terms and meet two deadlines, as reported by the New York Times, “financing federal operations after the start of the fiscal year on Oct. 1 to avoid a government shutdown, and increasing the nation’s borrowing limit to avert a default.” In other words, budget (September 30th) and debt ceiling (October 17th) are topics of conversation.
Adam Buttom at Forexlive explains “these shutdowns have happened before and they aren’t devastating but they have a real economic impact. […] This could be catastrophic. The government insists it can’t prioritize the tens-of-thousands of payments it makes daily. Missing a bond payment would literally be default and cause a devastating wave of downgrades.
Talk > Action?
CBO director Elmendorf added “The bottom line remains the same as it was last year. The federal budget is on a course that cannot be sustained indefinitely” and provided estimates explaining 4% of the country’s GDP is destined to pay the deficit with about 3.5% of GDP by 2023 and 6.5% by 2038 if no tax or spending changes are made.
Washington’s debate: the finger pointing game?
Leading the Republicans, the House Budget Committee Chairman Paul Ryan stated “the report reiterates the obvious: government spending, especially on health care, is driving our debt. And Obamacare will not solve the problem. The law was a costly mistake” blaming all US debt deficit to the current US President, Barack Obama. Retaliating, the top Democrat at HBC Chris Van Hollen replied saying that Republicans are “threatening to shut down the government” but acknowledged it may be a good idea to cut off deficits.
What are the deadlines?
In order to avoid government shutdown, Congress and the White House have to come to terms and meet two deadlines, as reported by the New York Times, “financing federal operations after the start of the fiscal year on Oct. 1 to avoid a government shutdown, and increasing the nation’s borrowing limit to avert a default.” In other words, budget (September 30th) and debt ceiling (October 17th) are topics of conversation.
Adam Buttom at Forexlive explains “these shutdowns have happened before and they aren’t devastating but they have a real economic impact. […] This could be catastrophic. The government insists it can’t prioritize the tens-of-thousands of payments it makes daily. Missing a bond payment would literally be default and cause a devastating wave of downgrades.