Jan 5, 2011

Mark Zandi on the U.S.'s fiscal mess

I think we're going to come to a - what I would call - a reasonably graceful resolution to the problem.


Let me give you some numbers. The deficit-to-GDP today is 9%. With an improving economy we'll probably get to a deficit-to-GDP of about 5%. To get to a sustainable deficit-to-GDP - one that's not causing our debt loads to rise and interest payments to increase - we need to get to 3% of GDP. So we have to close a 2% to GDP deficit gap. That's about $300 billion a year. I think we can address that: couple hundred billion in spending restraint, hundred billion in tax increase. If we do that and lay out a credible path to doing that over the next 5-7-10 years, I think we'll be just fine.

~ Mark Zandi, Yahoo Finance tech/ticker, January 5, 2011

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