The US Fiscal Cliff | Eurobank
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The US Fiscal Cliff

• While financial markets have focused on sovereign debt sustainability in Europe, the US has not yet suffered a debt-sustainability contagion due its monetary autonomy and safe-heaven status.
• The US has been running persistent budget deficits since 1970, mainly attributed to increasing government spending and a trend towards lower taxation since the late 1990s.
• The continuing disproportion between revenues and spending, combined with the aging of the population and the rising health care cost, could result in a greater accumulation of government debt and create doubts about longer-term debt sustainability of the US economy.
• Implementing effective consolidation and reform plans in a fragile US economic recovery will probably prove a real challenge for the US authorities.