1/26/2024 0 Comments Deficit spending by year![]() In addition to the two major economic shocks, a lasting downshift in government revenues brought about by major changes in tax policy also contributed to higher levels of debt. These episodes led to drops in economic activity and lower tax revenues and, at the same time, to increases in federal spending on recovery programs. ![]() The United States has seen two significant adverse shocks to economic activity in the 21st century - the deep and prolonged Great Recession that began in 2007 as a result of the global financial crisis, and the sharp economic downturn that followed the onset of the COVID-19 pandemic in early 2020. Negative economic shocks and policy changes over the past two decades have shifted current and projected levels of federal debt to higher levels. ![]() Ongoing large primary deficits, along with an already high level of debt and interest costs, lead to a dramatic snowball effect over time. But, such changes will be needed, as unprecedented levels of government debt impose significant economic costs and risks. Changes in policy that substantially narrow the federal deficit going forward have economic and political disadvantages. ![]() In order to keep the federal debt from ballooning to the levels currently predicted, the balance of government spending and revenues needs to be brought into closer alignment in coming years. Moreover, under current policy, the federal debt is expected to continue rising over the next three decades to reach levels well above any historical experience - and that holds true even under optimistic assumptions about future economic conditions. United States Federal Government debt rose sharply after the Great Recession and, at 98% of gross domestic product (GDP) in 2023, is close to its highest level ever. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |