Authors:
José Alberto López Rafaschieri and Luis Alberto López Rafaschieri
www.morochos.net
All public spending that has been implemented by the United States government to combat the 2008-2009 economic crisis has left consequences in the U.S. budget. By 2009, the government's fiscal deficit is expected to reach between 10% and 13% relative to GDP. While the national debt is estimated above 70%, also in relation to GDP.
That is, after this year, the U.S. government will be heavily indebted and with much more expenses than incomes, meaning that the government will have to: 1) borrow even more to continue operating, 2) raise taxes to increase revenue and 3) cut expenses.
However, though president Obama has been in charge for several months and it is impossible that he is not aware of the serious fiscal situation facing his administration, nobody has seen the implementation of policies designed to balance government accounts.
The U.S. Executive has only taken general approaches to explain theoretically how a tax increase on the rich and economic recovery would be enough to reduce the deficit to 3% of GDP in the short run. Besides, regarding the national debt, Obama has put all his hopes on the fact that a growing economy will decrease the debt/GDP ratio, but there is no a plan specifically oriented to reduce the enormous U.S. government debt.
The consequences of Obama's passive stance on public finance problems will begin to appear in the near future, which supposes that, when this recession ends, U.S. citizens will have to deal with a higher inflation rate and the risk of hurting important government programs like Social Security and Medicare.
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- The great failure of Obama's stimulus measures
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