CHART OF THE DAY: The Debt Commission Is A Game Changer

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Agreement to extend the Bush tax cuts may not be finalised yet, but worries the outcome will further effect the deficit are already emerging.

After last week’s recommendations from the fiscal commission suggested wide-ranging cuts to the U.S. government’s budget, the outlook if we don’t take that advice, and just continue to spend, is grim.

In fact, according to Deutsche Bank and CBO estimates, if we just continue down the same road of government spending, the U.S. debt to GDP ratio will rise to near 250% by around 2040.

But if we do listen to the deficit commission, we won’t be much better off than we are today, at slightly less than 50% debt to GDP after 2040.

Certainly, the latter conclusion is much better, however.

chart of the day, alternative fiscal scenario, dec 2010

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