Tags: US | US | Economy | IMF

IMF Calls for Deficit Cuts in US

Thursday, 08 Jul 2010 09:04 PM

 

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink

The International Monetary Fund is calling for the United States to make a stronger effort to curb its budget deficits.

The IMF said Thursday that in addition to cutting government spending, the Obama administration will have to consider raising taxes to get the U.S. deficit down to a manageable level.

The IMF proposed a range of possible tax increases that would be certain to generate huge political opposition, from reducing the popular tax deduction for home mortgages to instituting a national sales tax.

The IMF report said that the U.S. economic recovery was becoming "increasingly well established" but it warned that the risks remained on the downside.

Among the threats, the IMF said, were the possibility of a double-dip recession in housing, continued deterioration in commercial real estate and the threats posed to the U.S. economy from the European debt crisis.

But the IMF said so far the U.S. rebound "has proved stronger than we had earlier expected" thanks in large part to what it called a "powerful and effective policy response" on the part of the government, including the efforts of the Federal Reserve.

But the 185-nation international lending agency was less positive about the outlook for the U.S. government deficits going forward.

It noted that because of the recession and the government's spending to battle the downturn, the amount of U.S. government debt held by the public has almost doubled since 2007 and now stands at 64 percent of the economy as measured by the gross domestic product, the highest level since 1950.

The IMF said it projected that under current government policies, that debt burden would grow to 95 percent of GDP by 2020 and climb to 135 percent of GDP by 2030.

The IMF said that the Obama administration's goals of cutting the annual budget deficit in half as a percentage of the GDP by 2013 and stabilizing the public debt at just over 70 percent of GDP by 2015 were welcome.

But the IMF said it believed a more ambitious effort would need to be launched to achieve those goals.

Reacting to the report, a U.S. official said that the IMF had used forecasts for economic growth and interest rates that were too pessimistic compared to the consensus of most private forecasters and this had the impact of inflating the government's deficit problem over the next decade.

"While we share the IMF's assessment of the importance of President Obama's plan to cut the deficit in half and help spur a strong recovery, we believe that their economic projections over the next decade are overly pessimistic," said the official, who spoke on condition of anonymity because he was not authorized to speak on the record.

The IMF praised the administration's proposed three-year freeze on non-security discretionary spending but said using less optimistic assumptions about the economy, more will need to be done to trim deficits, including raising taxes.

It put forward a range of proposals from trimming the mortgage interest deduction to imposing higher taxes on energy or implementing a national sales tax saying the problems would grow in the future as the baby boomers make greater demands on Social Security and Medicare.

"Looking beyond 2015, the aim should be to put public debt firmly on a downward path to rebuild the room for fiscal maneuver, especially given the risks from large funding shortfalls in state and local government pension and health" programs, the IMF said.

In a statement, the Treasury Department said that the IMF review represented that "independent judgment and assessment" of the IMF staff.

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Country
Zip Code:
Privacy: We never share your email.
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
Top Stories
You May Also Like

Report: Change in Speaker Rules Could Harm GOP Dissenters

Friday, 19 Sep 2014 23:27 PM

House Republicans are considering a plan on selecting future speakers in an effort to avoid the embarrassing vote surrou . . .

Rep. Stockman to Newsmax: Arm Kurds, Don't Train Syrian Rebels

Friday, 19 Sep 2014 21:36 PM

Instead of spending any of the $500 million Congress approved this week to train Syrian rebels to fight the Islamic Stat . . .

Ted Cruz: A Nuclear Iran Remains 'Most Significant Threat'

Friday, 19 Sep 2014 20:42 PM

Iran's nuclear ambitions are a bigger threat to America than the Islamic State (ISIS) militants, Sen. Ted Cruz says.

Most Commented

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved