CBO Says US Budget Shortfall Could Reach $294 Billion
Summary
- The CBO estimates the US federal budget shortfall could reach as much as $294 billion.
- Markets are concerned that a wider fiscal deficit would increase the scale of US Treasury issuance and deepen the government's debt burden.
- Markets view the future direction of fiscal policy and Treasury supply and demand as key variables affecting interest rates and the dollar.
Forecast Trend Report by Period
The Congressional Budget Office warned that the federal government's fiscal position is worsening, with markets watching the potential for a wider deficit and increased Treasury issuance.
Walter Bloomberg reported on June 8 that the CBO estimates the US federal budget shortfall could reach as much as $294 billion.
The CBO said pressure on the fiscal balance is mounting as tax revenue declines and spending rises.
It added that concerns about an economic slowdown and changes in tax policy could reduce government revenue.
Markets are concerned that a wider fiscal deficit could lead to more US Treasury issuance and, over time, increase the government's debt burden.
Fiscal debate in the US has recently focused on extending tax cuts, boosting defense spending and increasing Social Security outlays.
Markets view the future direction of fiscal policy and Treasury supply-and-demand conditions as key variables for interest rates and the dollar.
