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Spending cuts in the U.S. debt ceiling agreement are insufficient, explains the Montreal Economic Institute

Montreal, August 5, 2011 – The deal adopted by the U.S. Congress and signed by President Obama on August 2, 2011 will see the federal debt ceiling in the United States raised by at least $2.1 trillion from its current limit of $14.3 trillion. An analysis of the agreement shows that even if all the cuts contained in it were indeed enacted, they would not prevent the U.S. federal debt from continuing to grow.

Germain Belzile, author of the Viewpoint on the increase of the U.S. debt ceiling, explains that: “Discretionary spending will continue to rise, even if it does so at a slower pace than was predicted before the deal. Since the government will continue to rely on massive borrowing, we must conclude that the cuts are too modest to stop the considerable increase of the U.S. federal debt projected in the coming years.”

The Viewpoint on the increase of the U.S. debt ceiling prepared by Germain Belzile, director of research at the Montreal Economic Institute, can be consulted free of charge on our website.

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The Montreal Economic Institute is an independent, non-partisan, not-for-profit research and educational organization. Through its publications, media appearances and conferences, the MEI stimulates debate on public policies in Quebec and across Canada by proposing wealth-creating reforms based on market mechanisms. It does not accept any government funding.

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Information and interview requests: Jasmin Guénette, vice president, Montreal Economic Institute / Tel.: 514-273-0969 ext. 2225 / Cell: 514-592-4056 / Email: jguenette@iedm.org

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