With Deficit Rising, Worries Grow The U.S. May Be Out Of Tools If Recession Hits

by MR Magazine Staff

The U.S. federal deficit will expand by about $800 billion more than previously expected over the next decade, as recent increases in spending are on track to push the nation into levels of debt unseen since the end of World War II, the Congressional Budget Office said Wednesday. The annual U.S. deficit will come close to hitting $1 trillion in 2019, an unusually high number during a period of economic growth, the CBO added. Driving that number is spending as well as a large tax cut in corporate and individual income taxes passed by Republicans in 2017. The new deficit estimates could deepen worries that U.S. policymakers face a shortage of tools to bolster the economy should the country fall into recession, some economists say. In addition to potentially less room to spend or pass tax cuts, the Federal Reserve cannot reduce interest rates, which are quite low, as much as it has during previous downturns. Read more at The Washington Post.