Debt Ceiling Deal and Spending Cuts: Potential Risks for US Economy.
The debt deal agreed upon by President Biden and Speaker Kevin McCarthy is less restrictive than the one cut in 2011, and the economy is in a better position to absorb the modest budget cuts. Some economists say the economy could use a mild dose of fiscal austerity right now to help lower a persistently high inflation rate. The newfound spending restraint might even help the economy. The deal would reduce federal spending by about $55 billion next year, compared with Congressional Budget Office forecasts, and by another $81 billion in 2025.