Page 2 - Us Deficit News Today

The US budget deficit has increased to $1.7 trillion, posing potential challenges for President Joe Bidens reelection campaign. The deficit grew by $320 billion due to a drop in tax revenues and lower Federal Reserve earnings, caused by higher interest rates. The deficit is the third-largest on record, although it almost doubles to around $2 trillion when excluding the impact of Bidens canceled student loan forgiveness program.

The 10-year Treasury yield has surged in September. Bond vigilantes could try to rein in runaway government spending by pushing yields even higher.

"What those facts say to me is that we're not going to find hundreds of billions of dollars for Ukraine in our budgets."

The solution is simple, but remains politically unpalatable: Spend less. It doesn’t matter how high taxes go, if the government spends more than it collects, the U.S. national debt will continue to soar.

The 10-year Treasury yield will remain at around 4.25%-4.5%, as the government needs to finance its widening deficit, Ed Yardeni wrote.

There are not enough economic reasons to believe that the U.S. chance of default has gone up in any significant way. The reasons are political.

Editorial cartoonist Dave Granlund draws on the Republican Kevin McCarthy position on the U.S. debt ceiling.

From the letter: Rep. Fischbach and other Republicans in Congress cannot deny that Congress avoided default and increased the debt ceiling three times under the previous White House occupant, Donald Trump, to pay for massive tax cuts that benefitted billionaires, drove up the debt significantly, but never helped the economy and average Americans like me.

From the editorial: Mr. Biden needs to adjust to the new reality. Democrats lost the House in November. If he truly wants to avert a default, the president has no choice but to work with the opposition. Republicans have put a proposal on the table that has popular support.

A US default may destabilize the global economy with a series of domino effects, Sergio Rossi, professor of macroeconomics and monetary economics at the University of Fribourg, Switzerland, told Sputnik.