…But Adds Additional Longer-Term Debt Risk
This weekend’s budget deal — agreed to in principal by the administration and Congress — removes the risk of a debt ceiling crisis in September and prevents a potential disruption in discretionary spending. Being said, the deal — which increases the governments discretionary spending from 1.32 trillion (in 2019) to 1.37 trillion (in 2020) — will ultimately be funded by additional debt as the country’s spending continues to outpace revenues (see chart).
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