News / USA

US Financial Concerns Recede as Economy Improves

TEXT SIZE - +
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

Multimedia Anti-Keystone XL Protests Continue

Demonstrators are worried about pipeline's effect on climate change, their traditional way of life, health and safety More

Thailand's Political Power Struggle Continues

Court gave Prime Minister Yingluck Shinawatra until May 2 to prepare her defense over abuse of power charges but uncertainty remains over election timing More

Malaysia Plane Search Tests Limits of Ocean Mapping Technology

Expert tells VOA existing equipment’s maximum operating depth is around 6 kilometers as operation continues on ocean bed for any trace of MH370 More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Pet Kangaroo Helps Spread Environmental Messagei
X
Penelope Poulou
April 22, 2014 5:53 PM
Children’s author Julia Heckathorn travels the world to learn about different ecosystems and endangered animals. She pours her knowledge into children’s books, hoping the next generation will right the environmental wrongs of our times. As in many children's books, the main character in Heckathorn's stories is an animal. Unlike those other characters, though, this one is real - a kangaroo, that lives in the author’s backyard. VOA’s Penelope Poulou has more.
Video

Video Pet Kangaroo Helps Spread Environmental Message

Children’s author Julia Heckathorn travels the world to learn about different ecosystems and endangered animals. She pours her knowledge into children’s books, hoping the next generation will right the environmental wrongs of our times. As in many children's books, the main character in Heckathorn's stories is an animal. Unlike those other characters, though, this one is real - a kangaroo, that lives in the author’s backyard. VOA’s Penelope Poulou has more.
Video

Video Pro-Russian Separatists Plan 'Federalization Referendum' in Eastern Ukraine

Pro-Russian separatists in eastern Ukraine say they plan to move forward next month with a referendum vote for greater autonomy, despite the Geneva agreement reached with Russia, the U.S. and Ukraine to end the political conflict. VOA's Brian Padden reports from the city of Donetsk in Eastern Ukraine.
Video

Video Pope Francis Hopes Dual Canonizations Will Reconcile Church

On April 27, two popes - John the XXIII and John Paul II - will be made saints in a ceremony at St. Peter’s Square. VOA religion correspondent Jerome Socolovsky says the dual canonization is part of the current pope’s program to reconcile liberals and conservatives in the Roman Catholic Church.
Video

Video In Capturing Nature's Majesty, Film Makes Case for Its Survival

French filmmaker Luc Jacquet won worldwide acclaim for his 2005 Academy Award-winning documentary "March of the Penguins". Now Jacquet is back with a new film that takes movie-goers deep into the heart of a tropical rainforest - not only to celebrate its grandeur, but to make the case for its survival. VOA's Rosanne Skirble reports.
Video

Video Boston Marathon Bittersweet for Many Runners

Monday's running of the Boston Marathon was bittersweet for many of the 36,000 participants as they finished the run that was interrupted by a double bombing last year. Many gathered along the route paid respect to the four people killed as a result of two bombings near the finish line. VOA's Carolyn Presutti returned to Boston this year to follow two runners, forever changed because of the crimes.
Video

Video International Students Learn Film Production in World's Movie Capital

Hollywood - which is part of Los Angeles - is the movie capital of the world, and many aspiring filmmakers go there in hopes of breaking into the movie business. Mike O'Sullivan reports that regional universities are also a magnet for students who hope to become producers or directors.
Video

Video Pacific Rim Trade Deal Proves Elusive

With the U.S.-led war in Iraq ended and American military involvement in Afghanistan winding down, President Barack Obama has sought to pivot the country's foreign policy focus towards Asia. One aspect of that pivot is the negotiation of a free-trade agreement among 12 Pacific Rim nations. But as Obama leaves this week on a trip to four Asian countries he has found it very difficult to complete the trade pact. VOA's Ken Bredemeier has more from Washington.
Video

Video Autistic Adults Face Housing, Job Challenges

Many parents of children with disabilities fear for the future of their adult child. It can be difficult to find services to help adults with disabilities - physical, mental or emotional - find work or live on their own. The mother of an autistic boy set up a foundation to advocate for the estimated 1.2 million American adults with autism, a developmental disorder that causes communication difficulties and often social difficulties. VOA's Faiza Elmasry reports.
AppleAndroid