MacArthur grantee the Center on Budget and Policy Priorities, has created a new feature on its website — the Economic Recovery Watch — which will provide rapid-response analyses as the Obama Administration and Congress formulate measures to address the economic crisis. One analysis concludes that the $825 billion economic recovery package offered by congressional leaders will have only a very small impact on the nation’s long-term fiscal problem, adding just three percent to the budget shortfall through 2050. At this moment, the economy requires substantial fiscal stimulus to increase aggregate demand and avert a deep and prolonged recession — even if deficits exceed $1 trillion this year and next. According to another analysis on the site, however, as the economy recovers policy-makers should begin to implement a balanced approach to deficit reduction through reforming the health care system, slowing the growth of federal expenditures, and increasing federal tax revenues. Over the long-term, without a change in current policies, federal deficits and debt in coming decades will grow to unprecedented levels that will threaten serious harm to the economy.
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