The way U.S Budget has been proposed it seems that the next generation will burn their hands due to the policy decision taken by these people. The numbers are not only eye propping but also gives immense sleepless nightmares about the future outlook of the U.S economy and its citizens. The areas of cuts down and hike are the triggers to provoke the thought that how well protected the future of U.S economy will be in the coming days.

Environmental Protection Agency would see a 26.5% funding reduction and 50 environmental programmes cancelled; the Interior Department, responsible for managing natural resources and cultural heritage, has been proposed with a 16% cut; and Housing and Urban Development, with a proposed reduction of 15.2%. State Department and international aid programmes are cut by nearly 8%. Even the Education sector has witnessed cut to the tune of 8%.

The cut has been spilt over to the poor segment of the society also. Measures to reduce welfare spending include cutting $1 trillion from Medicaid, the health programme for the poor and disabled; reforming some aspects of Medicare; and introducing new work requirements for people in need of food stamps, Medicaid and federal housing assistance, as well as tightening up eligibility for federal disability claimants.

A country with a higher fiscal deficit leads to a significant jump in income inequality and creating long term problems for society and citizens. Deficit projection and real-time impact of fragile global economic growth have two different perspectives in total.

The funniest part is that how businessmen turned President thinks about the economic well-being. The debate is between the capitalist mind and the future is driven economic mind-set.  12% increase has been proposed to Nasa for travel to Mars. Now, this is what will get GDP growth. Well, bless my heart and the U.S Citizens who are in their schools. Every country in time of weak economic growth phase should focus on improving the fiscal but it is a different story here.

The deficit is now just double and the period of managing the same has been extended to the next 15 years from the previous timeline of 10 years.

What will happen is that over a decade or more many economic uncertainties will come up which will need a special type of liquidity and budgetary management. This management will push up the deficit and hence the cost of borrowing. The impact will be borne by taxpayers and finally will have a cascading impact on the U.S next generation.

The ballooning government debt was earlier framed to be a budget deficit of $456bn by 2021. The shortfall is now more than double that figure. The problem is that GDP growth is not much impressive and cannot be expected even more and at the same time the deficit is building up. In simple words, the current GDP is based on huge tax cuts and significant growth of the deficit. The largest trust funds are getting closer to depleting their reserves which are going to create more problems when another economic trouble comes up.

The future of the U.S economy in terms of fiscal management is not secured. Buying of bonds might come up again and the way china has been treated might cost them again with higher pay-outs to buy the same.   From 2017, the US national debt has risen from under $20 trillion to over $23 trillion.  The best strategy which will come up to reduce

Now fiscal deficit cannot be managed by simply increasing tariffs and escalating the global cost of living and then making income inequality grows.  Being an election year more expenses and benefits will be passed to the U.S economy which will further change the number of the deficit. These changed numbers will be managed by imposing tariff and creating slowdown for the global economy. What a brilliant recipe.  The loss of revenue from the Tax cut will be filled from the pockets of cross border countries, threatening them and long term trade relationships.

The challenge for the U.S economy will be to manage these relationships when the deficit will be beyond the control and overseas investor will command the U.S Treasury.

Author Bio

Qualification: MBA
Company: IFAN Finserv Private Ltd.(SPA Group Company)
Location: mumbai, Maharashtra, IN
Member Since: 25 Sep 2019 | Total Posts: 130
God has been kind and the people with whom I have the journey of my career over the last 16 years have been great fortune to have them as my best friends standing today .Well, I hold more than 16 years of experience in the Financial Advisory, Global Macro Analysis and Business Development Strategy. View Full Profile

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December 2020