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Washington in action! From the New York Times:
The House on Friday morning overwhelmingly approved a $1.15 trillion spending measure, as part of a sweeping, year-end fiscal deal that also includes a package of tax breaks worth more than $620 billion for businesses and low-income workers. The Senate was also set to approve the legislation, bundled into a single bill, in a fast-track series of votes later Friday morning. …
After a period of belt-tightening in Washington — including automatic budget cuts known as sequesters imposed in 2013 — the spending measure provides a notable $66 billion increase in federal outlays above previously agreed-upon limits, divided equally between military and nonmilitary programs, for 2016. It also represents a return to a more traditional appropriations process, with lawmakers directing money to an array of their priorities, including a $1.4 billion increase for military construction projects and $2 billion increase for the National Institutes of Health.
And how will this budget deal affect the budget deficit and federal debt? Well, it will make them bigger, of course. Here is Goldman Sachs:
Overall, this brings our deficit totals to $650bn (3.5% of GDP) for FY2016, $575bn (3.0%) for FY2017, $575bn (2.9%) for FY2018, and $625bn (3.0%) for FY2019 (Exhibit 2, left panel). We expect the level of federal debt/GDP ratio to remain broadly stable, rising by around 1% of GDP per year over the next few years.
And the chart the quote references:
Note that, at least as GS calculates things, the federal debt will again be edging higher toward 80% of GDP vs. the CBO baseline that had it drifting a bit lower. It is tough to buy concerns about potential debt crises when policymakers seem perfectly content to leave debt at historically high levels.