News / USA

US Financial Concerns Recede as Economy Improves

VOA News
Just weeks ago, the political focus in Washington was on reaching a "grand bargain" on taxes and spending to cut the country's burgeoning debt, but now a string of events seems to have pushed the issue into the background.

The U.S. government's debt is nearing $17 trillion, as its annual budget deficit topped $1 trillion each of the last four years. That prompted U.S. President Barack Obama and his key congressional opponents to start talks about curbing the deficit, reforming spending plans for popular government pension and health care plans for older Americans and altering the country's complex tax laws.

But such talks have been halted, and part of the reason is that the U.S. economy seems to be on the upswing, and as a result government tax collections are increasing. A key congressional budget agency says the government budget deficit will shrink to $642 billion this year, the smallest in five years, and continue to fall in the next two years.

The senior economist at one the country's biggest banks, James Glassman at JPMorgan Chase, told VOA that actions by Congress contributed to the country's revived outlook.

“They allowed the social security payroll taxes to go back up a couple percentage points," said Glassman. "You’ve got sequestration, which is kind of holding government spending, not cutting government spending, but holding it down.  And meanwhile the economy is recovering, and so the deficit has been coming down.”

Patrick Socci, dean of the Hofstra University business school in New York, told VOA that while the country's economic fortunes improved, Congress diverted its attention from spending and debt concerns to investigate how the country's tax agency, the Internal Revenue Service, targeted conservative groups for extra scrutiny as they sought tax-exempt status.

“The bandwidth [attention span] of the American public, I think, is relatively limited.  And now you have the IRS scandal. And that I think occupied everybody’s bandwidth," said Socci. "And so they’re concentrating on that and it impinges on the discussion of a balanced budget or attempting to move in the direction of closing the deficit because here you have the arm of the government that collects taxes being significantly compromised by these alleged scandals that have taken place.”

Some Washington leaders originally thought Congress would have to increase the country's borrowing limit in the next few weeks. But Socci said that with the improving economic fortunes, that has been pushed off for months.

“I think the debt ceiling they thought originally would have to been resolved sometime around now, and now they don’t think that they have to touch the debt ceiling for at least another six months, which in political terms is an eternity," said Socci.

But Glassman sees trouble ahead for the government if it fails to rein in rapidly increasing spending for a popular program covering health care expenses for older Americans.  

“The problem is when you look out over the horizon, the longer-term picture is not so great," said Glassman. "Federal spending for health is growing steadily, has been for a long time, and the Congressional Budget Office tells us eventually, if we don’t do anything, today’s cyclical deficit may go away, but that then we’ll start to see the deficit growing again. And that’s really the issue that should have been addressed.”

But he said that as the government deficit retreats, "everybody is sort of losing interest" in acting now. Glassman said Washington's leaders "tend not to deal with issues unless they are staring us in the face."

You May Like

Video British Fighters On Frontline of ISIS Information War

It’s estimated that several hundred British citizens are fighting for Islamic State alongside other foreign jihadists More

Multimedia Hit Song Delivers Ebola Message in Liberia

'Ebola in Town' has danceable beat, while also delivering serious message about avoiding infection More

Video New Technology Gives Surgeons Unprecedented Views of Patients’ Bodies

Technology offers real-time, interactive, medical visualization and is multi-dimensional More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Native Bees May Help Save Cropsi
X
Deborah Block
August 22, 2014 12:23 AM
U.S. President Barack Obama has called for a federal strategy to promote the health of bees that have been declining. The honeybee has been waning due to parasites, disease and pesticides. Wild bees may be used to take over their role as crop pollinators. Scientists first need to learn a lot more about wild bees, says biologist Sam Droege, who is pioneering the first national inventory on native bees. VOA’s Deborah Block went to his research laboratory in Beltsville, Maryland, to bring you more.
Video

Video Native Bees May Help Save Crops

U.S. President Barack Obama has called for a federal strategy to promote the health of bees that have been declining. The honeybee has been waning due to parasites, disease and pesticides. Wild bees may be used to take over their role as crop pollinators. Scientists first need to learn a lot more about wild bees, says biologist Sam Droege, who is pioneering the first national inventory on native bees. VOA’s Deborah Block went to his research laboratory in Beltsville, Maryland, to bring you more.
Video

Video US Defense Officials Plan for Long-Term Strategy to Contain Islamic State

U.S. defense officials say American air strikes in Iraq have helped deter Islamic State militants for the time being, but that a broad international effort is needed to defeat the extremists permanently. Defense Secretary Chuck Hagel warned Thursday that the group formerly known as the Islamic State in Iraq and the Levant, or ISIL, is better organized, and financially and militarily stronger than any other known terrorist group. Zlatica Hoke has more.
Video

Video Drug-Resistant Malaria Spreads in Southeast Asia

On Thailand’s border with Myanmar, also known as Burma, a malaria research and treatment clinic is stepping up efforts to eliminate a drug-resistant form of the parasite - before it spreads abroad. Steve Sandford reports from Mae Sot, Thailand.
Video

Video Gaza Conflict, Hamas Popularity Challenge Abbas

The Palestinian unity government of Mahmoud Abbas has failed to convince Hamas to agree to Egyptian-negotiated terms with Israel on a Gaza cease-fire. VOA State Department Correspondent Scott Stearns reports on what the Gaza conflict means for President Abbas, with whom U.S. officials have worked for years on a two-state solution to the Israeli-Palestinian conflict.
Video

Video Nigeria's 'Nollywood' Movie Industry Rolls in High Gear

Twenty years after its birth in a video shop in Lagos, Nigeria's "Nollywood" is one of the most prolific film industries on earth. Despite low budgets and whirlwind production schedules, Nigerian films are wildly popular in Africa and industry professionals say they hope, in the future, their films will be as great in quality as they are in quantity. Heather Murdock has more for VOA from Lagos.
Video

Video UN Launches 'Biggest Aid Operation in 30 Years' in Iraq

The United Nations has launched what it describes as one of the biggest aid operations in 30 years in northern Iraq, as hundreds of thousands of refugees flee the extremist Sunni militant group calling itself the Islamic State. As Kurdish and Iraqi forces battle the Sunni insurgents, the fighting has forced more people to flee their homes. Kurdish authorities say the international community must act now to avert a humanitarian catastrophe. Henry Ridgwell reports for VOA from London.
Video

Video Cambodian American Hip Hop Artist Sings of Personal Struggles

A growing underground movement of Cambodian American hip hop artists is rapping about the struggles of living in urban America. Most, if not all of them, are refugees or children of refugees who came to the United States from Cambodia to escape the Khmer Rouge genocide of the 1970s. Through their music, the artists hope to give voice to immigrants who have been struggling quietly for years. Elizabeth Lee reports from Long Beach, California.
Video

Video African Media Tries to Educate Public About Ebola

While the Ebola epidemic continues to claim lives in West Africa, information technology specialists, together with radio and TV reporters, are battling misinformation and prejudice about the disease - using social media to educate the public about the deadly virus. VOA’s George Putic has more.

AppleAndroid