The Era of Fiscal Austerity Is Over. Here’s What Big Deficits Mean for the Economy.<br />“If you look at conventional measures, unemployment looks really low,<br />but on the other hand if you look back to what we used to think of the potential of the economy a few years ago, we may have some room to grow.”<br />The public debt was already on track to rise relative to the size of the economy before the new tax<br />and spending deals; now it will probably rise faster.<br />ratio would rise to 91 percent in 2027, from 77 percent in 2017.<br />hasn’t updated those numbers to reflect the new tax and spending legislation, but the Committee for a Responsible Federal Budget estimates<br />that it will turn out to be between 99 and 109 percent, depending on whether provisions of the tax law are allowed to expire as they are scheduled to.<br />A budget deal passed in the early hours of Friday morning includes $300 billion in new spending over the next two years for all sorts of government programs<br />and $90 billion in disaster relief, without corresponding cuts elsewhere in the budget.<br />When the Congressional Budget Office last forecast the nation’s fiscal future in June, it<br />projected a $689 billion budget deficit in the fiscal year that begins this coming fall.<br />Taxpayers in 2027 were forecast to pay $818 billion a year in interest costs<br />even before the tax cuts and spending increases, or 2.4 percent of G. D.P.
