US: budget blow

Article Abstract:

James Capel foresees an agreement on the US budget in Dec 1995. Congress is seeking reductions in public spending, while Bill Clinton is likely to veto some changes as a move against extremism by Republicans. Economic activity will be affected while an agreement is not reached. There could be a drop of 8% in federal purchases of services and goods. This could result in a drop in gross domestic product (GDP) of 0.5% for 4th qtr 1995. Interest rates are not likely to be cut until the budget has been decided.

Budget, Budgeting, Budgets, Political aspects

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US: debt worries

Article Abstract:

The US bond market is concerned that no agreement has been reached over the budget, according to Merrill Lynch. Lack of an agreement has meant a drop in government spending and this should reduce the budget deficit in 1996. The deficit looks set to rise as a proportion of gross domestic product after 1997, and this is unsustainable. More people will be retired, leading to a heavier burden on the fewer people in work which will erode the tax base and increase tax burdens unless policies change.

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Vanishing deficit

Article Abstract:

The US budget deficit is decreasing in 1997 and may vanish by 1998, according to Dresdner Kleinwort Benson. Tax revenues are rising with economic growth and a more progressive tax system, and welfare spending is falling as unemployment drops. This reduction in the deficit should help President Clinton and Congress in negotiations to cut the deficit over the longer term since there will be less need to reduce government spending.

Legislative Bodies, Budget, Tax revenue estimating

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