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Tag: Fiscal policy

  • Japan Cabinet OKs $200B spending plan to counter inflation

    Japan Cabinet OKs $200B spending plan to counter inflation

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    TOKYO — Japanese Prime Minister Fumio Kishida’s government approved Friday a hefty economic package that will include government funding of about 29 trillion yen ($200 billion) to soften the burden of costs from rising utility rates and food prices.

    Kishida was set to give a news conference in the evening.

    Inflation has been rising in Japan along with globally surging prices. A weakening of the yen against the dollar has amplified costs for imports.

    The stimulus package includes subsidies for households that are largely seen as an attempt by Kishida to lift his plunging popularity. His government has been rocked by the ruling Liberal Democratic Party’s close ties to the South Korean-based Unification church, which surfaced after the assassination of former leader Shinzo Abe in July.

    “We will make sure to deliver the measures to everyone and do our utmost so that people can feel supported in their daily lives,” Kishida said after preliminary approval of the package earlier in the day.

    Any market reaction to another flood of stimulus was likely already taken into account earlier in the week as share prices fell in Tokyo, with the benchmark Nikkei 225 losing 0.9% to 27,105.20.

    Japan has stuck to using fiscal measures, or government spending, to counter current economic challenges. While central banks around the world are raising interest rates aggressively to try to tame decades-high inflation, Japan’s inflation rate is a relatively moderate 3% and the greater fear is that the economy will stall, not overheat.

    The Bank of Japan, which has kept its benchmark rate at minus 0.1% since 2016, kept its longstanding lax monetary policy at a policy making meeting that wrapped up on Friday.

    In doing so, it runs the risk of seeing the yen weaken further since the Federal Reserve is still raising rates, which tends to push the dollar higher. That in turn will raise prices in Japan since it imports much of what it consumes.

    The overall size of the package, including private-sector funding and fiscal measures, is expected to amount to 71.6 trillion yen ($490 trillion), Kishida said.

    The plan includes about 45,000 yen ($300) subsidies for household electricity and gas bills and coupons worth 100,000 yen ($680) for women who are pregnant or rearing babies.

    The 29 trillion yen ($200 billion) spending package will be part of a supplementary budget that still must be approved by the parliament.

    Kishida vowed to compile and submit a budget plan and get it approved as soon as possible.

    His support ratings have sunk since July amid public criticisms over his Liberal Democratic Party’s longstanding cozy ties with the Unification Church, which is accused of brainwashing adherents into making huge donations, causing financial hardships and breaking up families.

    An LDP internal survey showed about half of its 400 lawmakers were tied to the church, though not as followers. Kishida’s economy minister, Daishiro Yamagiwa, was obliged to resign earlier this week because of his ties with the church and failure to explain them. He was replaced by former health minister Shigeyuki Goto.

    The hefty spending package will require issuing of more government bonds, further straining Japan’s worsening national debt that has piled up as the government spent heavily to counter the impact of the pandemic. Japan now has a long-term debt exceeding 1.2 quadrillion yen ($8.2 trillion), or more than 200% of the size of its economy.

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  • China’s economic growth accelerates but weak amid shutdowns

    China’s economic growth accelerates but weak amid shutdowns

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    BEIJING — China’s economic growth picked up in the latest quarter but still was among the weakest in decades as the ruling Communist Party tries to reverse a slump while enforcing anti-virus controls and a crackdown on debt in its vast real estate industry.

    The world’s second-largest economy grew by 3.9% over a year earlier in the three months ending in September, up from the previous quarter’s 0.4%, official data showed Monday.

    The announcement was planned for last week but postponed while the ruling Communist Party met to award President Xi Jinping a new term as leader.

    Xi, the most powerful leader in decades, wants a bigger party role in business and technology development. That has prompted warnings tighter control of entrepreneurs who generate jobs and wealth will depress growth that already was in long-term decline.

    The party gave Xi a free hand by installing a seven-member ruling Standing Committee made up of his allies. Supporters of free enterprise including Premier Li Keqiang, the party’s No. 2 until last week, were dropped from the leadership.

    Chinese stock markets closed lower Monday despite the unexpectedly strong data, suggesting investors still are uneasy about the country’s growth prospects.

    The country’s market benchmark, the Shanghai Composite Index, lost more than 2%. The Hang Seng index in Hong Kong plunged by an unusually wide daily margin of 6.4%. Tokyo and other Asian markets gained.

    The International Monetary Fund and private sector forecasters say the economy will expand by as little as 3% this year. That would be the second weakest since the 1980s after 2020, when growth plunged to 2.4% at the start of the coronavirus pandemic.

    Investors and the public watched the congress for initiatives to stimulate the economy or reduce the impact of “Zero COVID” controls that shut down cities and disrupt business, but none were announced.

    The latest slide in growth that began in mid-2021 hurts China’s trading partners by depressing demand for imported oil, food and consumer goods.

    The improvement is “mainly a result of more flexible” anti-virus controls that isolate individual buildings or neighborhoods instead of cities, said Iris Pang of ING in a report. But she said more lockdowns are “still a big uncertainty.”

    “This uncertainty means the effectiveness of pro-growth policy would be undermined,” Pang said.

    Growth slid after controls on debt that regulators worry is dangerously high caused a slump in real estate sales and construction, one of China’s biggest economic engines. Economic growth fell to 4% over a year earlier in the final quarter.

    Beijing has eased mortgage lending and local governments have taken over some unfinished projects to make sure buyers get apartments. But regulators are sticking to debt limits have forced small developers into bankruptcy and caused some bigger competitors to miss payments to bondholders.

    The ruling party is enforcing “Zero COVID” despite rising costs and public frustration after Shanghai and other industrial centers were temporarily shut down. That has boiled over into protests in some areas at a time when other countries are easing anti-virus controls.

    For the first nine months of 2022, growth was 3% over a year earlier, up from 2.5% in the first six months but barely half the ruling party’s official 5.5% target. Leaders have stopped talking about that goal but promised easier lending and other measures to boost growth.

    Growth is “highly uneven” and supported by government spending on building roads and other public works while consumer spending is weakening, said Larry Hu and Yuxiao Zhang of Macquarie in a report.

    In September, retail sales growth fell to 2.5% over a year earlier from the previous month’s 5.4%. Growth in factory output accelerated to 6.3% from 4.2%.

    Also Monday, trade data showed export growth declined to 5.7% compared with a year earlier in September from the previous month’s 7%. Imports crept up 0.3%.

    “Most of the economy lost momentum last month,” said Julian Evans-Pritchard of Capital Economics in a report. “The situation looks to have worsened in October.”

    Investment in infrastructure, mostly government money, rose 16% in September compared with the previous month’s 15%.

    Repeated shutdowns and uncertainty about business conditions have devastated entrepreneurs. Small retailers and restaurants have closed. Others say they are struggling to stay afloat.

    Beijing is using cautious, targeted stimulus instead of across-the-board spending, a strategy that will take longer to show results, economists say. Chinese leaders worry too much spending might push up politically sensitive housing costs or corporate debt.

    ———

    National Bureau of Statistics (in Chinese): www.stats.gov.cn

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  • China’s economic growth accelerates but weak amid shutdowns

    China’s economic growth accelerates but weak amid shutdowns

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    BEIJING — China’s economic growth picked up in the latest quarter but still was among the weakest in decades as the ruling Communist Party tries to reverse a slump while enforcing anti-virus controls and a crackdown on debt in its vast real estate industry.

    The world’s second-largest economy grew by 3.9% over a year earlier in the three months ending in September, up from the previous quarter’s 0.4%, official data showed Monday.

    The announcement was planned for last week but postponed while the ruling Communist Party met to award President Xi Jinping a new term as leader.

    Xi, the most powerful leader in decades, wants a bigger party role in business and technology development. That has prompted warnings tighter control of entrepreneurs who generate jobs and wealth will depress growth that already was in long-term decline.

    The party gave Xi a free hand by installing a seven-member ruling Standing Committee made up of his allies. Supporters of free enterprise including Premier Li Keqiang, the party’s No. 2 until last week, were dropped from the leadership.

    The International Monetary Fund and private sector forecasters say the economy will expand by as little as 3% this year. That would be the second weakest since the 1980s after 2020, when growth plunged to 2.4% at the start of the coronavirus pandemic.

    Investors and the public watched the congress for initiatives to stimulate the economy or reduce the impact of “Zero COVID” controls that shut down cities and disrupt business, but none were announced.

    The latest slide in growth that began in mid-2021 hurts China’s trading partners by depressing demand for imported oil, food and consumer goods.

    The improvement is “mainly a result of more flexible” anti-virus controls that isolate individual buildings or neighborhoods instead of cities, said Iris Pang of ING in a report. But she said more lockdowns are “still a big uncertainty.”

    “This uncertainty means the effectiveness of pro-growth policy would be undermined,” Pang said.

    Growth slid after controls on debt that regulators worry is dangerously high caused a slump in real estate sales and construction, one of China’s biggest economic engines. Economic growth fell to 4% over a year earlier in the final quarter.

    Beijing has eased mortgage lending and local governments have taken over some unfinished projects to make sure buyers get apartments. But regulators are sticking to debt limits have forced small developers into bankruptcy and caused some bigger competitors to miss payments to bondholders.

    The ruling party is enforcing “Zero COVID” despite rising costs and public frustration after Shanghai and other industrial centers were temporarily shut down. That has boiled over into protests in some areas at a time when other countries are easing anti-virus controls.

    For the first nine months of 2022, growth was 3% over a year earlier, up from 2.5% in the first six months but barely half the ruling party’s official 5.5% target. Leaders have stopped talking about that goal but promised easier lending and other measures to boost growth.

    Growth is “highly uneven” and supported by government spending on building roads and other public works while consumer spending is weakening, said Larry Hu and Yuxiao Zhang of Macquarie in a report.

    In September, retail sales growth fell to 2.5% over a year earlier from the previous month’s 5.4%. Growth in factory output accelerated to 6.3% from 4.2%.

    Also Monday, trade data showed export growth declined to 5.7% compared with a year earlier in September from the previous month’s 7%. Imports crept up 0.3%.

    “Most of the economy lost momentum last month,” said Julian Evans-Pritchard of Capital Economics in a report. “The situation looks to have worsened in October.”

    Investment in infrastructure, mostly government money, rose 16% in September compared with the previous month’s 15%.

    Repeated shutdowns and uncertainty about business conditions have devastated entrepreneurs. Small retailers and restaurants have closed. Others say they are struggling to stay afloat.

    Beijing is using cautious, targeted stimulus instead of across-the-board spending, a strategy that will take longer to show results, economists say. Chinese leaders worry too much spending might push up politically sensitive housing costs or corporate debt.

    ———

    National Bureau of Statistics (in Chinese): www.stats.gov.cn

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  • UK leader in peril after Treasury chief axes ‘Trussonomics’

    UK leader in peril after Treasury chief axes ‘Trussonomics’

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    LONDON — The U.K.’s new Treasury chief ripped up the government’s economic plan on Monday, dramatically reversing most of the tax cuts and spending plans that new Prime Minister Liz Truss announced less than a month ago. The move raises more questions about how long the beleaguered British leader can stay in office, though Truss insisted she has no plans to quit.

    Chancellor of the Exchequer Jeremy Hunt, said he was scrapping “almost all” of Truss’ tax cuts, along with her flagship energy policy and her promise — repeated just last week — that there will be no public spending cuts.

    While the reversal of policy calmed financial markets and helped restore the government’s economic credibility, it further undermined the prime minister’s rapidly crumbling authority and fueled calls for her to step down before her despairing Conservative Party forces her out.

    Truss declined to attend the House of Commons to answer a question on the economy from the leader of the opposition, sending House of Commons leader Penny Mordaunt in her place. Mordaunt denied a lawmaker’s suggestion that Truss was “cowering under her desk” to avoid scrutiny.

    “The prime minister is not under a desk,” Mordaunt said, words hardly likely to inspire confidence in the leader who only came to power last month.

    Truss’ spokesman said the prime minister and Hunt had jointly agreed on the economic changes. But Hunt told Conservative lawmakers that Truss “backed him to the hilt in making difficult decisions” — suggesting he has a free hand to make policy.

    With Truss sitting silently beside him, Hunt told lawmakers that he was canceling Truss’ plan to reduce the basic rate of income tax by 1 percentage point and most of her other libertarian economic policies. In a message aimed squarely at reassuring the financial markets, he said Britain was “a country that funds our promises and pays our debts.”

    “And when that is questioned, as it has been, this government will take the difficult decisions necessary to ensure there is trust and confidence in our national finances,” Hunt said.

    Hunt was appointed Friday after Truss fired his predecessor Kwasi Kwarteng, who spent less than six weeks in the Treasury job. Hunt is seeking to restore the Conservative government’s credibility for sound fiscal policy after Truss and Kwarteng rushed out a plan for tax cuts without detailing how they would pay for them.

    Truss and Kwarteng jointly came up with a Sept. 23 announcement of 45 billion pounds ($50 billion) in unfunded tax cuts that immediately spooked the financial markets. The cuts fueled investor concerns about unsustainable levels of government borrowing, which pushed up government borrowing costs, raised home mortgage costs and sent the pound plummeting to an all-time low against the dollar. The Bank of England was forced to intervene to protect pension funds, which were squeezed by volatility in the bond market.

    Over the weekend, Hunt has been dismantling that economic plan. The government had already ditched parts of its tax-cutting plan and announced it would make a medium-term fiscal statement on Oct. 31, weeks earlier than previously scheduled.

    On Monday, Hunt went further. He scaled back a cap on energy prices designed to help households pay their bills. It will now be reviewed in April rather than lasting two years — sweeping away one of Truss’ signature plans to help Britons facing a cost-of-living crisis as food, fuel and mortgage prices soar.

    Hunt told lawmakers that the measures he announced would save 32 billion pounds a year, but that spending cuts were also coming.

    “There remain, I’m afraid, many difficult decisions to be announced” in the fuller budget statement on Oct. 31, he said.

    Hunt also said he was setting up a new Economic Advisory Council of economists and investment bankers to help inform policy — a far cry from Truss’ bid to throw out economic “orthodoxy.”

    The pound rose more than 1% to above $1.13 in London after Hunt’s announcements. That pushed the U.K. currency back above where it was trading on Sept. 22, the day before Kwarteng announced the tax cuts.

    Yields on 10-year government bonds, an indicator of government borrowing costs, fell to 3.947% from 4.327% on Friday. It was 3.495% on Sept. 22. Bond yields tend to rise as the risk of a borrower defaulting increases.

    Paul Johnson, director of the Institute for Fiscal Studies think tank, said Monday’s announcements would not be enough “to undo the damage caused by the debacle of the last few weeks. But they are big, welcome, clear steps in the right direction.”

    The financial fiasco has turned Truss into a lame-duck prime minister. She took office just six weeks ago after winning a party election to replace Prime Minister Boris Johnson, who was forced out in July after ethics scandals ensnared his administration. Many Conservatives now believe their only hope is to replace Truss — but they are divided about who should take over.

    In a BBC interview, Truss conceded that she had made mistakes. But, she vowed, “I will lead the Conservatives into the next general election.”

    Few believe that possible. The Conservative Party still commands a large majority in Parliament, and — in theory — has two years until a national election must be held. Polls suggest holding an election now would be a wipeout for the Tories, with the Labour Party winning a big majority.

    Labour Party economics spokeswoman Rachel Reeves said Truss was “barely in office, and she is certainly not in power,” and claimed the Conservatives could not fix the problems they had caused.

    “The truth is an arsonist is still an arsonist, even if he runs back into the burning building with a bucket of water,” she said.

    Chris Beauchamp, chief market analyst at online trading firm IG, said the markets were reassured by the presence of Hunt, a former U.K. foreign secretary and health chief.

    “I think markets in some ways would rather things just stayed as they are for a while,” he said. “OK, the PM has found her authority quite truncated. But at least you’ve got the chancellor in place almost running the country.

    “I think they’re quite content with that slightly odd state of affairs, for the moment.”

    ———

    Jo Kearney contributed to this story.

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  • UK leader Liz Truss goes from triumph to trouble in 6 weeks

    UK leader Liz Truss goes from triumph to trouble in 6 weeks

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    LONDON — When Liz Truss was running to lead Britain this summer, an ally predicted her first weeks in office would be turbulent.

    But few were prepared for the scale of the sound and fury -– least of all Truss herself. In just six weeks, the prime minister’s libertarian economic policies have triggered a financial crisis, emergency central bank intervention, multiple U-turns and the firing of her Treasury chief.

    Now Truss faces a mutiny inside the governing Conservative Party that leaves her leadership hanging by a thread.

    Conservative lawmaker Robert Halfon fumed on Sunday that the last few weeks had brought “one horror story after another.”

    “The government has looked like libertarian jihadists and treated the whole country as kind of laboratory mice on which to carry out ultra, ultra free-market experiments,” he told Sky News.

    It’s not as if the party wasn’t warned. During the summertime contest to lead the Conservatives, Truss called herself a disruptor who would challenge economic “orthodoxy.” She promised she would cut taxes and slash red tape, and would spur Britain’s sluggish economy to grow.

    Her rival, former Treasury chief Rishi Sunak, argued that immediate tax cuts would be reckless amid the economic shockwaves from the coronavirus pandemic and the war in Ukraine.

    The 172,000 Conservative Party members -– who are largely older and affluent — preferred Truss’ boosterish vision. She won 57% of members’ votes to become leader of the governing party on Sept. 5. The next day, she was appointed prime minister by Queen Elizabeth II in one of the monarch’s final acts before her death on Sept. 8.

    Truss’ first days in office were overshadowed by a period of national mourning for the queen. Then on Sept. 23, Treasury chief Kwasi Kwarteng announced the economic plan he and Truss had drawn up. It included 45 billion pounds ($50 billion) in tax cuts -– including an income tax reduction for the highest earners — without an accompanying assessment of how the government would pay for them.

    Truss was doing what she and allies said she would. Libertarian think-tank chief Mark Littlewood predicted during the summer there would be “fireworks” as the new prime minister pushed for economic reform at “absolutely breakneck speed.”

    Still, the scale of the announcement took financial markets, and political experts, by surprise.

    “Many of us, wrongly, expected her to pivot after she won the leadership contest in the way many presidents do after winning the primaries,” said Tim Bale, professor of politics at Queen Mary University of London. “But she didn’t do that. She actually meant what she said.”

    The pound plunged to a record low against the U.S. dollar and the cost of government borrowing soared. The Bank of England was forced to step in to buy government bonds and prevent the financial crisis from spreading to the wider economy. The central bank also warned that interest rates will have to rise even faster than expected to curb inflation that is running at around 10%, leaving millions of homeowners facing big increases in mortgage payments.

    Jill Rutter, a senior fellow at the Institute for Government think tank, said Truss and Kwarteng made a series of “unforced errors” with their economic package.

    “They shouldn’t have made their contempt for economic institutions quite so clear,” she said. “I think they could have listened to advice. And I think one of the things that they got very wrong was to announce one part of the package, the tax cuts … without the spending side of the equation.”

    As the negative reaction grew, Truss began to abandon bits of the package in a bid to reassure her party and the markets. The tax cut for top earners was ditched in the middle of the Conservative Party’s annual conference in early October as the party rebelled.

    It wasn’t enough. On Friday, Truss fired Kwarteng and replaced her longtime friend and ally with Jeremy Hunt, who served as health secretary and foreign secretary in the Conservative governments of David Cameron and Theresa May.

    At a brief, downbeat news conference, the prime minister acknowledged that “parts of our mini budget went further and faster than markets were expecting.” She reversed a planned cut in corporation tax, another pillar of her economic plan, to “reassure the markets of our fiscal discipline.”

    Truss is still prime minister in name, but power in government has shifted to Hunt, who has signaled he plans to rip up much of her remaining economic plan when he makes a medium-term budget statement on Oct. 31. He has said tax increases and public spending cuts will be needed to restore the government’s fiscal credibility.

    Still, Hunt insisted Sunday: “The prime minister’s in charge.”

    “She’s listened. She’s changed. She’s been willing to do that most difficult thing in politics, which is to change tack,” Hunt told the BBC.

    The Conservative Party still commands a large majority in Parliament, and -– in theory -– has two years until a national election must be held. Polls suggest an election would be a wipeout for the Tories, with the Labour Party winning a big majority.

    Conservative lawmakers are agonizing about whether to try to replace their leader for a second time this year. In July, the party forced out Prime Minister Boris Johnson, who led them to victory in 2019, when serial ethics scandals ensnared his administration.

    Now many of them have buyer’s remorse about his replacement. Under party rules, Truss is safe from a leadership challenge for a year, but some Conservative legislators believe she can be forced to resign if the party can agree on a successor. Defeated rival Sunak, House of Commons leader Penny Mordaunt and popular Defense Secretary Ben Wallace are among the names being mentioned as potential replacements. Johnson, who remains a lawmaker, still has supporters, too.

    Junior Treasury minister Andrew Griffith argued Sunday that Truss should be given a chance to try to restore order.

    “This is a time when we need stability,” he told Sky News. “People at home are just tearing their hair out at the level of uncertainty. What they want to see is a competent government getting on with (the) job.”

    ———

    Follow AP’s coverage of British politics at https://apnews.com/hub/united-kingdom

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  • Spain, Germany discuss energy crisis before EU summit

    Spain, Germany discuss energy crisis before EU summit

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    MADRID — The leaders of Spain and Germany held talks in Spain Wednesday, two days before both participate in an European Union summit to discuss Europe’s energy crisis derived from Russia’s invasion of Ukraine.

    Spanish Prime Minister Pedro Sánchez hosted German Chancellor Olaf Scholz in the northwestern city of A Coruña. The two center-left leaders were accompanied by 15 ministers from their governments.

    The EU summit in Prague on Friday will likely include discussions on Germany’s plan to subsidize gas prices for its consumers and businesses, a move that has raised questions from France and Italy.

    Sánchez said that he “empathizes” with Germany due to its pressing need to find alternatives to Russian gas and oil, while adding that the EU should find common solutions. Both Sánchez and Scholz support reforming the EU’s energy market.

    “The consequences of the war in Ukraine impact us all, but clearly it has a greater impact on the countries with a higher dependency on Russian carbon-based fuels … so we empathize with the situation that Germany is in,” Sánchez said. “(And) Germany is Europe’s leading economy, so it is in all our interests that Germany does well.”

    Scholz, meanwhile, reiterated his support for Spain’s push to build another, larger pipeline with France that could pump natural gas, and potentially green hydrogen, northwards to the rest of Europe. That plan, however, has received zero support from French president Emmanuel Macron.

    Scholz said that they did not discuss Germany’s suggested European anti-missile defense shield as some local media had anticipated.

    On Thursday, leaders of over 40 EU and non-EU countries will meet in Prague to launch a “European Political Community” championed by Macron and aimed at boosting security and prosperity across the continent. The next day the leaders of the 27 EU members will gather to talk about energy and the war in Ukraine.

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  • US starts fiscal year with record $31 trillion in debt

    US starts fiscal year with record $31 trillion in debt

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    WASHINGTON — The nation’s gross national debt has surpassed $31 trillion, according to a U.S. Treasury report released Tuesday that logs America’s daily finances.

    Edging closer to the statutory ceiling of roughly $31.4 trillion — an artificial cap Congress placed on the U.S. government’s ability to borrow — the debt numbers hit an already tenuous economy facing high inflation, rising interest rates and a strong U.S. dollar.

    And while President Joe Biden has touted his administration’s deficit reduction efforts this year and recently signed the so-called Inflation Reduction Act, which attempts to tame 40-year high price increases caused by a variety of economic factors, economists say the latest debt numbers are a cause for concern.

    Owen Zidar, a Princeton economist, said rising interest rates will exacerbate the nation’s growing debt issues and make the debt itself more costly. The Federal Reserve has raised rates several times this year in an effort to combat inflation.

    Zidar said the debt “should encourage us to consider some tax policies that almost passed through the legislative process but didn’t get enough support,” like imposing higher taxes on the wealthy and closing the carried interest loophole, which allows money managers to treat their income as capital gains.

    “I think the point here is if you weren’t worried before about the debt before, you should be — and if you were worried before, you should be even more worried,” Zidar said.

    The Congressional Budget Office earlier this year released a report on America’s debt load, warning in its 30-year outlook that, if unaddressed, the debt will soon spiral upward to new highs that could ultimately imperil the U.S. economy.

    In its August Mid-Session Review, the administration forecasted that this year’s budget deficit will be nearly $400 billion lower than it estimated back in March, due in part to stronger than expected revenues, reduced spending, and an economy that has recovered all the jobs lost during the multi-year pandemic.

    In full, this year’s deficit will decline by $1.7 trillion, representing the single largest decline in the federal deficit in American history, the Office of Management and Budget said in August.

    Maya MacGuineas, president of the Committee for a Responsible Federal Budget said in an emailed statement Tuesday, “This is a new record no one should be proud of.”

    “In the past 18 months, we’ve witnessed inflation rise to a 40-year high, interest rates climbing in part to combat this inflation, and several budget-busting pieces of legislation and executive actions,” MacGuineas said. “We are addicted to debt.”

    A representative from the Treasury Department was not immediately available for comment.

    Sung Won Sohn, an economics professor at Loyola Marymount University, said “it took this nation 200 years to pile up its first trillion dollars in national debt, and since the pandemic we have been adding at the rate of 1 trillion nearly every quarter.”

    Predicting high inflation for the “foreseeable future,” he said, “when you increase government spending and money supply, you will pay the price later.”

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