CBO: Debt poses greater long-term economic threat than fiscal cliff

Joel Gehrke

Lawmakers wrangling over “fiscal cliff” negotiations may have a bigger problem on their hands over the next decade, as the current rate of federal spending could drive the United States into a fiscal crisis, according to the Congressional Budget Office.

Associated Press Published: November 16, 2012
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Joel Gehrke

Lawmakers wrangling over “fiscal cliff” negotiations may have a bigger problem on their hands over the next decade, as the current rate of federal spending could drive the United States into a fiscal crisis, according to the Congressional Budget Office.

The CBO issued this warning in a little-noticed report on the effects of the fiscal cliff that was released just before David Petraeus resigned as CIA director (my emphasis):

[I]f the fiscal tightening was removed and the policies that are currently in effect were kept in place indefinitely, a continued surge in federal debt during the rest of this decade and beyond would raise the risk of a fiscal crisis (in which the government would lose the ability to borrow money at affordable interest rates) and would eventually reduce the nation’s output and income below what would occur if the fiscal tightening was allowed to take place as currently set by law.

Click to read full article at Washington Examiner



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