Associated Press: “Administration officials have downplayed the risk of simultaneously slashing taxes and boosting spending, arguing that the result will be faster growth that will then shrink the debt. But the higher deficits would come just as the Federal Reserve is on course to continue — and perhaps accelerate — the pace of its short-term rate hikes. The Fed’s rate increases will likely lead, in time, to higher borrowing rates for consumers and businesses and likely slow economic growth.”
“The market’s plunge over the past week was initially ignited by fears of higher inflation and interest rates. But investors have also had to consider a new threat: A two-year government funding deal that would add about $300 billion to budget deficits from higher spending. The Fed might have to respond by raising rates more aggressively to counter the stimulative effect of the spending increases.”
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