The Republicans have capitulated on the US debt ceiling. This averts the risk of abrupt fiscal tightening in a slowing economy that has yet to digest the most aggressive monetary squeeze in over 40 years.
The putative accord between the White House and Congress does not even try to address the larger threat to America’s economic model and hegemonic status.
The Congressional Budget Office says the US is on course for fiscal deficits of 7pc of GDP as far as the eye can see.
Sacred entitlements remain untouchable. Middle-class welfare – ie. consumption – will continue to eat up an ever-greater share of the budget. It is this that is leading to slow fiscal ruin.
The gross debt-to-GDP ratio was 62pc in 2007 (IMF data). It will be 122pc this year, and 138pc by 2028, with no sign of reaching a plateau. By then it will have overtaken Italy.
“It is a sobering thought that the US is racking up as much debt-to-GDP accumulation over 20 years as it did over two world wars and the Great Depression combined”
✍️ Ambrose Evans-Pritchardhttps://t.co/wWkRv2XYKd
— Telegraph Business (@telebusiness) May 30, 2023