Enterprise Television-IMF Predicts U.S. Debt Load will be Worse Than Italy’s by 2023
In five years, the U.S. government is forecast to have a bleaker debt profile than Italy, the perennial poor man of the Group of Seven industrial nations, Bloomberg reports.
The U.S. debt-to-GDP ratio is projected widen to 116.9 percent by 2023 while Italy’s is seen narrowing to 116.6 percent, according to the latest data from the International Monetary Fund. The U.S. will also place ahead of both Mozambique and Burundi in terms of the weight of its fiscal burden.
The numbers put a renewed focus on the U.S. deteriorating budget after the enactment in December of $1.5 trillion in tax cuts, and the passage more recently of $300 billion in new spending.
President Donald Trump’s administration argues that the tax overhaul combined with deregulation will help the economy accelerate, which in turn will generate enough extra revenue to avoid any fiscal fallout.
Officials with the Federal Reserve and Congressional Budget Office are skeptical about those expectations, as they forecast long-term economic growth will fall short of expansion rates needed to fund tax cuts. The central bank’s most recent forecasts show a median estimate of 2.7 percent for this year’s expansion slowing to 2 percent in 2020, while the CBO sees GDP growth slowing from 3.3 percent this year to 1.8 percent in 2020.
Former Fed Chairman Alan Greenspan, speaking in an interview Wednesday with Tom Keene on Bloomberg Television, said lowering corporate tax rates was a good move. “The trouble, unfortunately, is it’s unfunded,” he said, adding that Republicans should have done “spending cuts first before you try to do tax cuts.”
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