The U.S. budget deficit, while less than half as large as it was four years ago, will require more policy changes to prevent debt from eventually rising at an unsustainable pace, the Obama administration said.
“We must remain focused on enacting pro-growth, pro-jobs policies that will fuel our economy while maintaining fiscal discipline,” Treasury Secretary Jacob J. Lew said in a letter attached to the financial report on the fiscal year 2013 released by his department today. “Such policies include closing wasteful tax loopholes, reducing costs where it makes sense, and using a portion of those savings for smart investments in key areas like manufacturing, infrastructure, and education.”
The Obama administration expects debt to remain stable at about 70 percent of economy over the next decade and then start to grow, before reaching 277 percent of gross domestic product in 2088.
“This trend implies that current policy is not sustainable,” the administration said in the report. “The sooner policies are put in place to avert these trends, the smaller the revenue increases and/or spending decreases will need to be to return the government to a sustainable fiscal path.”
Among the risks that could affect the government’s financial condition are potential losses on sales of securities the Federal Reserve has amassed on its balance sheet, the U.S. Government Accountability Office said in a letter accompanying the report.
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