The U.S. Treasury’s borrowing plans have come into sharp focus this week.
Market experts generally cite political dysfunction as a prime reason why they’ve become more pessimistic about the fiscal outlook. | Getty ImagesFederal Reserve Chair Jerome Powell might be done raising interest rates, but that doesn’t mean rates won’t continue to rise.
People are “taking a harder look at the budget in general and the fiscal situation in general and realizing this sort of borrowing is likely to continue in perpetuity,” said Donald Schneider, deputy head of U.S. policy at Piper Sandler. “The Democratic leadership and now GOP leadership in the form of Trump have no interest in addressing the actual drivers of our debt,” Schneider said.
Not everyone’s alarmed. Bobby Kogan, a former staffer at Biden’s Office of Management and Budget, sees no reason to panic about the debt. He said the data suggests it’s easier now to get the debt under control than it was under former President George W. Bush, citing the shrinking of the so-called fiscal gap. The fiscal gap refers to how much deficit reduction you’d have to do each year, as a percentage of GDP, to stabilize the debt.
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