U.S. Budget Outlook

Journal Article

U.S. Budget Outlook

Near-Term Bright, Long-Term Dark
April 9, 2007

Abstract

President Bush's 2008 budget is more interesting than most, especially with regard to health policy, but the Democratically controlled Congress shows little interest. The President will not have all his tax cuts extended, although the extension of those for the middle class and poor seem almost certain. The promise of a balanced budget in 2012 is unlikely to be achieved, but the ratio of the deficit and the public debt to gross domestic product is likely to decline. Because of foreign debt purchases, the debt available to U.S. private investors will be no higher absolutely than it was in the mid-1990s. Thus, fiscal policy will impose little upward pressure on interest rates. Read BCA Publication's Global Fixed Income Strategy Special Report.

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