Earlier this month, the Fed  BIS central bankers’ speeches  5  reiterated its overall commitment to maintain extraordinary support for the recovery for some time to come. This commitment is strong, and I believe the Fed’s policies will continue to help sustain progress in the job market. But the scars from the Great Recession remain, and reaching our goals will take time.
If funding is achieved by reducing public sector spending, this can be expected to have a dampening effect, in net terms, on overall demand in the economy. This is mainly because the import share of public consumption is lower than the import 2  share of private consumption triggered by lower taxes .