Moody's: US President's Budget Proposal Would Improve Government's Finances, but Adoption Unlikely

New York, February 04, 2015 -- On 2 February, President Obama's administration presented a budget proposal for fiscal year 2016 (beginning 1 October, 2015) that included numerous tax and spending initiatives. These initiatives would lead to a deficit and debt trajectory significantly more positive than the baseline scenario for the US (Aaa stable) presented by the Congressional Budget Office (CBO). The prospect that this proposal will be adopted as presented is very low, says Moody's. However, the administration's budget represents a starting point for negotiations between the president and the Republican-controlled congress on some issues that may result in some reduction in the medium-term debt trajectory of the federal government. The politics of such an outcome remain unclear, as it is still early in the new Congress's term.

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