I think this is the news item I was recalling:
May 11, 2004 Tuesday
SECTION: ECONOMIC NEWS
LENGTH: 319 words
HEADLINE: OECD shaves US current acct deficit estimates but calls for more action
DATELINE: PARIS
BODY:
The OECD shaved its projections for the US current account deficit in 2004 and 2005 but warned that the world's largest economy still needs to address the issue.
"The large deficits projected over the coming years underline the need to adjust both tax and spending levels," the organisation said in its semiannual outlook.
"The fiscal deficit must be reduced over the medium term," it added.
US government finances have "deteriorated substantially" as a result of cyclical developments, tax cuts and higher spending, especially on defence and homeland security, the report said.
The OECD cut its expectations for the US current account deficit to 4.7 bln usd for 2004 from 5.0 bln usd previously. It also lowered its estimate for 2005, to 4.8 bln usd from 5.1 bln.
Following the recession and several rounds of tax cuts, government revenue as a proportion of GDP in the US stands at its lowest level since the mid 1980s, while the fiscal gap is still widening during the second year of recovery, it said.
The Bush administration's budget projections may prove "too optimistic," the OECD warned.
The US government estimates the federal deficit will fall to 1.5 pct of GDP by the fiscal year 2009 from 4.5 pct in the fiscal year 2004.
Separately, the Bush adminstration is expected to request an additional 50 bln usd for military operations and reconstruction in Iraq and Afghanistan, the OECD predicted.
Turning to monetary policy, the OECD said US rates are likely to go up in the second half of 2004.
With inflation remaining subdued, monetary policy has stayed supportive, but
interest rates will need to be raised "as the slack in product and labour markets dissipates," it added.
sivakumar.sithraputhran@afxnews.com
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LOAD-DATE: May 12, 2004
matrix.textore.net
I am not quite sure what to say about 2004, except that requests for emergency funds are not likely to be as high in the future, and the anticipated savings from the Medicare bill have to do with reducing the need for acute and surgical care by encouraging early drug treatment. Obviously, whatever savings there may be will lag. |
