In the wake of an ambitious infrastructure plan and a budget that drew fire from virtually all sides, Goldman Sachs said in a note to clients that the federal deficit would reach 5.2 percent of U.S. growth by 2019, and would "Continue climbing gradually from there."
While tax cuts are partly responsible, Goldman stated that "Projected increases in mandatory spending-this includes Social Security, Medicare, Medicaid, and income support programs-are primarily responsible" for an unsustainable surge in spending.
In a weekly podcast, Caleb Brown, a scholar at the libertarian Cato Institute, branded the Trump administration spending and infrastructure spending "Budget buster[s]" saying that overall spending was "Very likely" to rise in the coming years despite isolated cuts.
If current imbalances hold, Goldman Sachs expects the ratio to hit 85 percent of GDP by 2021.
Goldman's analysts wrote that the "Growth effect comes from the change in the deficit, not the level, and further expansion would put the U.S. onto an even less sustainable long-term trend. Second, some of the recent deficit expansion relates to changes unlikely to be repeated, such as the temporarily large effect of certain tax provisions."
"We expect rising interest rates and a rising debt level to lead to a meaningful increase in interest expense," Goldman said.
https://www.cnbc.com/2018/02/19/goldman-sachs-warns-us-spending-could-push-up-rates-and-debt-levels.html
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