And You Thought Social Security Was In Trouble...Rudi Dornbusch
This fall, Congress will try to ax budget deficits that loom as far as the eye can see. Without such action, the Congressional Budget Office projects that rising medical expenses and a shrinking social security surplus will, by 2005, widen the deficit to 4.1% of gross domestic product and the ratio of debt to GDP will climb to 60%. Balancing the budget would make room for more investment and reduce the chances that financial markets will have to shoulder the burden of heavy deficit financing. What's more, balancing the budget need not create a slump or a recession. True, the government will spend less, but interest rates will fall, and private spending will take up the slack.
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