Moody's Foster Says U.S. Fiscal Strength to Decline Gradually

The video discusses the US deficit, highlighting its growth due to tax cuts and increased spending. It projects a rise in the deficit from 4% to 8% of GDP over the next decade without policy changes. The US's ability to sustain debt is supported by its large economy and reserve currency status. However, tax cuts have reduced federal revenue, particularly from corporate taxes. Entitlement reform is suggested as a solution to improve fiscal health.

What was a significant fiscal event in the first year of the Trump presidency?

• A reduction in defense spending

• The largest deficit in six years

• An increase in entitlement spending

• A surplus in the federal budget

Which feature of the US economy helps it sustain higher levels of debt?

• Reserve currency status

• High foreign exchange risk

• Lack of diversity

• Its small size

What percentage of global reserves are held in US dollars?

• 30%

• 60%

• 50%

• 70%

What was a key driver of the decline in federal revenue?

• Decline in corporate income taxes

• Increase in personal income taxes

• Reduction in defense spending

• Rise in payroll taxes

What is suggested as a solution to improve US fiscal health?

• Entitlement reform

• Increasing corporate taxes

• Cutting defense spending

• Reducing personal income taxes