CBO Director Says Our Fiscal Trajectory Is Unsustainable – We’re Spending Too Much

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On Friday, CNBC’s “Squawk Box,” CBO Director Phillip Swagel said, “the fiscal trajectory in the U.S. is not sustainable right now.” He believes we have time to fix it.

CNBC Senior Economics Reporter Steve Liesman asked what would put the US on a sustainable path, and are we on one?

Swagel responded, “So, we know the fiscal trajectory in the U.S. is not sustainable right now. Something has to be done. The good news is that we have time, right? So, in some sense, we look at the UK and — we’ll see what they announce later today — but we look at them, and we see the effect of sentiment. Sentiment can change, and that, as I said, feeds through to interest rates and can hit us pretty quickly. We seem to be in a good position now in the sense that we have time to make adjustments. We have to make them. We don’t have to make them at this moment.”

Spending spurs interest rate problems.

“…the challenge is that net interest payments are rising from 1.6% to GDP now to, you know, more than double 3.3% in 10 years, and then doubling again, you know, over the next 30 years. And that’s just going to squeeze out all the other things that we want our government to do, from, you know, whether it’s National Defense. whether it’s more tax cuts, whether they’re spending on education, anything, interest payments are going to squeeze all of that out.”

He said spending, strong demand [after the lockdowns], and supply chain problems were hampering the economy.

It’s mostly spending. Watch:


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