BREAKINGVIEWS-Iran conflict is fresh threat to US fiscal future

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Gabriel Rubin

WASHINGTON, March 5 (Reuters Breakingviews) - Heavy military spending and supply ructions will challenge a profligate government also facing a $175 bln hit from cancelled tariffs. Higher interest rates increase the risk of a sovereign debt spiral. Forecasts that borrowing will hit 120% of GDP in 2035 may be too optimistic.

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CONTEXT NEWS

An open-ended conflict between the United States and Iran could spill back onto the U.S. economy through falling asset prices, a trade shock to allies, and higher inflation, at least in the near term, New York Federal Reserve President John Williams said on March 3.

The U.S. budget deficit will grow slightly in fiscal 2026 to $1.9 trillion, the Congressional Budget Office forecast in February, showing that on balance, President Donald Trump's economic policies are worsening the country's fiscal picture amid low economic growth.


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