FISCAL policy has tumbled from the top of the political agenda with remarkable speed. For most of Barack Obama’s presidency, controlling the national debt, which spiked from 35% of GDP to over 70% after the recession, was a priority for Republicans. Democrats were less worried, but still saw the need for America to fix its long-run challenge: soaring spending on Medicare (public health insurance for the over-65s) and Social Security (public pensions). Mr Obama set up a doomed bipartisan commission with the task of doing just that. Yet in this election, the Republicans have abandoned their fiscal hawkishness. And the long-run barely gets a look-in.
That is not all down to Donald Trump. The economic recovery, combined with sharp cuts to spending (triggered by the failure to reach a deficit-reduction deal) have reduced borrowing significantly, from 9.8% of GDP in 2009 to 2.5% in 2015 (in 2016 it will be a little higher). Republicans in Congress—which, unlike the president, actually writes the budget—have also had a change of heart. Their economic priority is now to boost growth by cutting taxes and red-tape, which they blame for the...Continue reading
Source: United States http://ift.tt/2cJDusm
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