All articles tagged with #fiscal policy
The Washington Post Editorial Board argues that with a looming federal debt and large deficits, Social Security is projected to pay six-figure benefits to some wealthy seniors; capping benefits for the wealthiest retirees (starting at $100,000 annually) would be a prudent first step in reforming the program and slowing spending.
The U.S. national debt has surpassed $39 trillion, highlighting mounting government borrowing and ongoing fiscal pressures.
The Congressional Budget Office reports that the U.S. has been borrowing about $50 billion per week for the past five months, accelerating the national debt and prompting concerns about the sustainability of ongoing deficits and potential increases in future interest costs.
IMF staff’s 2026 Article IV for the United States finds that the 2025 policy shift toward domestic self-reliance—emphasizing domestic manufacturing and energy, tighter immigration, deregulation, and tariff use—supported 2025 growth around 2.2% with unemployment near 4.3% in January 2026. Tariffs provide near‑term revenue but can raise inflation and dampen output; stricter immigration reduces the foreign-born labor supply and lowers activity, while deregulation and energy-focused policies boost dynamism. The outlook projects ~2.4% growth in 2026, core PCE inflation returning to 2% by 2027, and unemployment near 4% through 2026–27, but the current account deficit and NIIP are expected to widen and the debt-to-GDP ratio to rise toward about 140% by 2031 unless a credible frontloaded fiscal consolidation and revenue reforms are enacted. An alternative policy mix—permanent investment expensing, a destination-based tax, more open skilled immigration, and targeted safety-net reforms—could raise employment, reduce deficits and external imbalances, and improve distributional outcomes. The Fed should proceed gradually, maintaining policy credibility and financial stability as regulation and digital assets evolve.
The IMF told Japan to keep raising interest rates toward a neutral stance and refrain from further fiscal loosening, warning that trimming the 8% consumption tax on food would erode fiscal space and heighten risk from shocks. With inflation above target, the BOJ is gradually winding down stimulus and is expected to reach a neutral policy by 2027, while Japan must maintain a credible medium-term fiscal framework amid high debt and rising interest costs; any tax relief should be limited and temporary, and liquidity should be safeguarded with possible exceptional interventions, supported by a flexible exchange rate to absorb external shocks.
PM Sanae Takaichi pledged to take necessary steps against speculative or abnormal market moves after a yen spike and bond rout tied to expansionary fiscal policy and the BOJ’s slow rate hikes, while promising a two-year suspension of the 8% food sales tax; opposition parties floated funding a tax cut by tapping the BOJ’s ETF holdings or currency intervention reserves, prompting concerns about market impact and central-bank independence as the BOJ signals readiness for emergency bond-buying if yields rise.
A Danish pension fund sold its US government bonds over concerns about Washington’s overspending, highlighting a core tension: American financial dominance currently rests on sustained corporate vigor and fiscal discipline. If US dynamism wanes amidst rising deficits, its edge in global markets could erode even as the country remains the benchmark today.
Japan’s government bond market wobbled as investors priced in a clash between a spend-heavy fiscal stance under Takaichi Sanae and the BoJ’s tightening path, sending 30-year yields up sharply and the 40-year yield above 4% for the first time, ahead of the BoJ’s policy meeting.
President Trump issued vetoes on his first bills of his second term, including a bipartisan water infrastructure bill for Colorado and a measure related to the Miccosukee tribe, amid accusations of partisan politics and controversy over Colorado's water projects and tribal issues.
Japan is projected to achieve its first primary budget surplus in 28 years by 2026, as the government aims to balance economic growth with fiscal sustainability, with Prime Minister Sanae Takaichi highlighting the record budget and efforts to address long-standing financial concerns.
Prime Minister Sanae Takaichi's Cabinet has approved a record ¥122.3 trillion budget for the next fiscal year, including issuing ¥29.6 trillion in bonds to cover revenue shortfalls, and plans to submit it to parliament for approval.
Economist David Rosenberg dismisses the US Q3 GDP report's 4.3% growth as misleading, arguing that true growth is only about 0.8% after adjusting for government spending, imports, and savings decline, indicating underlying economic weakness amid debate over inflation and Federal Reserve policies.
The IMF reports positive progress in El Salvador's economic recovery, highlighting faster-than-expected growth, strong fiscal consolidation efforts, and ongoing structural reforms, with negotiations for the second review of the Extended Fund Facility continuing.
The Treasury is promoting a new investment account program, dubbed 'Trump Accounts,' aimed at encouraging families, employers, and philanthropists to contribute funds for children's future expenses, with the program launching before the midterm elections. Despite modest tax benefits and a projected $15 billion cost, the initiative seeks to increase investment among lower to middle-income families and involves contributions from various sources, including corporations and nonprofits, to support children's education and housing needs.
The US Mint has stopped producing the 1-cent coin after over 230 years, citing financial inefficiency and modernization, with the final coins minted in 2025 and set to be auctioned off, marking the end of an era for the penny.