Fiscal Failure

Despite low interest rates, the medium-term fiscal outlook is deteriorating. Last year debt-to-GDP in 2025 was projected to be 81%, it’s now 91%, up from 75.6% today. This is because realistically, revenues are expected to remain flat while spending rises by 3 percentage points of GDP. Specifically, entitlements will grow by 1.7 percentage points, net interest costs by 1.9, while discretionary spending falls by 0.6 of a percentage point. Unsustainable.