2018-02-19marketwatch.com

U.S. fiscal policy is headed for "uncharted territory."That's how a team of economists at Goldman Sachs, led by Jan Hatzius, have described the government's current spending and tax plans, as they also warned that the growth kick for the economy from those strategies will eventually fade.

"Congress has voted twice in the last two months to substantially expand the budget deficit despite an already elevated debt level and an economy that shows no need for additional fiscal stimulus," said the Goldman economists. Tax cuts signed into law by U.S. President Donald Trump in December will add $1.5 trillion to the deficit over a 10-year period.

Goldman economists expect the U.S. [deficit] level to hit 5.2% of gross domestic product by 2019, and keep climbing gradually from there. In the past, a strengthening economy and rising debt burden has prompted Congress to raise taxes and cut spending. But this time, the opposite has occurred, which will leave revenues low for a few years and push spending to its "highest point in decades," they said.



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