Harvard University economist Martin Feldstein is forecasting sluggish economic growth for the global economy for years and a lower standard of living for all as a result of the massive deficit spending of the U.S. government.
“Large fiscal deficits would mean that the government must borrow funds that would otherwise be available for private businesses to finance investment in productivity-enhancing plant and equipment,” writes Feldstein in India’s Business Standard newspaper.
“Without that investment, economic growth will be slower and the standard of living lower than it would otherwise be. Moreover, the deficits would mean higher interest rates and continued international imbalances.”
Stemming the tide of these waves of fiscal deficits is critical to the global economy’s health, the former White House economist said.
Feldstein notes that the Congressional Budget Office has estimated that the administration’s proposed spending policies will cause the federal government’s fiscal deficit to exceed 5 percent of GDP in 2019.
That’s even after “a decade of continuous economic growth,” said Feldstein.
“The deficits run up during the intervening decade would cause the national debt to double, rising to more than 80 per cent of GDP,” Feldstein said.
Other experts agree that long-term growth may be adversely impacted by all this federal spending.
Brian Darling, a director of the Heritage Foundation, a Washington D.C.-based think tank writes on the Heritage blog that Sen. Max Baucus (D-Mt.), chairman of the Senate Finance Committee, is adding another $50 billion to his health care spending plan through an amendment this week.
That massive, nearly $1 trillion bill could make it through the Senate as early as next week.
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