In the good old days, America\u2019s budget deficit yawned when the economy was weak and shrank when it was strong. It fell from 13% to 4% of gdp during Barack Obama\u2019s presidency, as the economy recovered from the financial crisis of 2007-09. Today unemployment is at a 50-year low. Yet borrowing is rising fast. Tax cuts in 2017 and higher government spending have widened the deficit to 5.5% of gdp, according to imf data\u2014the largest, by far, of any rich country.<\/p>\n
It could soon widen even further. President Donald Trump is thought to want a pre-election giveaway. Fox News is awash with rumours of \u201cTax Cuts 2.0\u201d. This month the Treasury announced it would issue a 20-year bond, which would lengthen the average maturity of its debt and lock in low interest rates for longer. All this is quite a change for many Republicans, who once accused Mr Obama of profligacy, but now say that trillion-dollar deficits are no big deal. Democratic presidential candidates, meanwhile, are talking about Medicare for All and a Green New Deal. A new consensus on fiscal policy has descended on Washington. Can it hold?<\/p>\n
Read it all<\/a>.<\/p>\n America’s deficit\u20145.5% of GDP\u2014is the largest by far of any rich country. It could soon widen even further https:\/\/t.co\/nI60RGfNnW<\/a><\/p>\n \u2014 The Economist (@TheEconomist) January 26, 2020<\/a><\/p><\/blockquote>\n\n