We found a match
Your institution may have access to this item. Find your institution then sign in to continue.
- Title
How to think about the U.S. budget challenge.
- Authors
Aaron, Henry J.
- Abstract
The long‐term budget prospects of the United States are grim. Projected spending greatly exceeds projected revenue over the next few decades. Projected growth of health care spending accounts for more than all of the anticipated gap. Without action to narrow the gap, accumulating deficits will drive up the ratio of debt to GDP. Interest payments will rise correspondingly. At some point, domestic and foreign holders of U.S. debt will come to doubt the capacity of the government to service this debt. At that point, they will demand sharply higher interest rates. The combination of increasing debt and rising interest rates will cause debt service costs to explode. What follows would be some combination of collapsing investment, declining production, debt default, and inflation—in brief, a calamitous mess. That such a mess will occur is certain if budget deficits as large as those currently anticipated are realized. Precisely when is impossible to forecast accurately.
- Subjects
UNITED States; UNITED States federal budget; PUBLIC expenditure forecasting; GOVERNMENT revenue; MEDICAL care financing; UNITED States. Congressional Budget Office; GROSS domestic product; BUDGET deficits -- Government policy; DEBT service; ECONOMIC development
- Publication
Journal of Policy Analysis & Management, 2010, Vol 29, Issue 4, p883
- ISSN
0276-8739
- Publication type
Article
- DOI
10.1002/pam.20536