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IMF Researchers: US Budget Gaps Endanger Global Economy
2004-01-08
Anyone tired of doom & gloom yet?
EFL
In a report on U.S. budget outlook, IMF researchers described the state of government finances as "perilous" in the long run and urged Congress and the White House to take steps to quickly rein in the deficits. Although federal tax cuts and spending increases since 2001 bolstered the global economy in the short run, the report said "large U.S. fiscal deficits also pose significant risks for the rest of the world."
The sky is falling, The sky is falling!!
Bush inherited an economy that was in recession and a stock market that crashed, which was followed by the 9-11 attacks and the War on Terror, including the invasion and occupation of two countries. Somehow, I'd expect that to show up in the economic picture...
The White House has said it expects the budget deficit to expand to a record $ 475 billion in fiscal 2004, exceeding 4% of the gross domestic product. U.S. Treasury Secretary John Snow on Wednesday described that level as "entirely manageable," and said the Bush administration expects the deficit to shrink to 2% of GDP within five years.
Shouldn’t we petition Brussels for an exemption to that rule?
But the IMF researchers said that won’t be enough to address the government’s long-term fiscal problems - including financing the Social Security and Medicare programs over the next 75 years. In their report, they said the government faces a $47 trillion shortfall in its ability to pay for those and all other long-term obligations. Closing that gap would require European style socialism "an immediate and permanent" federal tax increase of 60% or a 50% cut in Social Security and Medicare benefits.
... preferably the former, which would be guaranteed to sink the economy."
Congress and the White House can avert those dangers by acting immediately to balance the budgets, the researchers estimated. Allowing the recent tax cuts to expire by 2013 would reduce the budget shortfall by nearly half. The researchers also said Congress should consider a tax on energy consumption, arguing that it would "help meet the administration’s environmental objectives while also providing substantial support for fiscal consolidation." Such tax increases, they calculated, would have a minimal effect on U.S. economic growth.
Well then the opposite also must be true, no tax increases would have a minimum deletereous effect on US economic growth. The intenationalist movement won’t be happy until we are as miserable as everyone else
Especially in the energy department. The "tax on energy consumption" equates to a gasoline or petroleum products tax, which increases transportation costs on everything. It's like imposing an additional inflation layer on the economy — see 1973 oil embargo, effects thereof. The usual suspects keep coming back to this one again and again. And every time the succeed in imposing a tax on gas, diesel fuel, and/or home heating oil, they wait 12 months and raise the same cry all over again. The U.S. depends on its transportation industry. And Americans don't live in small towns, where they can walk to work, or in cities, where they can take the bus. They live in 'burbs, where a car is needed just to get to the grocery store, not to mention work, the baby sitter, or the bowling alley.
Posted by:JerseyMike

#22  I have yet to understand what you need SUVs for on Californian freeways.

Because we have something here called choice. If someone needs or wants a large vehicle, then if they can afford it and its upkeep, they buy it. If they want a smaller vehicle, that's available too. It's all up to the individual.

Taxing gas guzzlers higher and energy saving vehicles lower doesn't hurt the traditional American mobility needs one bit.

Why is it necessary for government to force people to do something they may not want to do on their own?
Posted by: Bomb-a-rama   2004-1-9 12:31:53 AM  

#21  I have a bad back, and have a hard time getting in and out of small cars. It hurts! I drive a Caravan, neither a sedan nor an SUV. As Zheng Fei says, we drive a lot of miles. I can take off early in the morning from my house, and be in Pagosa Springs by noon - 160 miles. IF I left my house in Wiesbaden at 7:30 and drove 160 miles, I'd be in someone else's country! Depending on the direction and the amount of Autobahn construction I hit, I might still be there by noon. It's 1200 miles - 1800Km from my house to my brother's, and I've only driven in three states. Of course, one of those is Texas...
Posted by: Old Patriot   2004-1-8 8:26:23 PM  

#20  Kinda hard to go boonie-hoppin in a VW Golf,TGA
Posted by: raptor   2004-1-8 7:37:05 PM  

#19  I have yet to understand what you need SUVs for on Californian freeways.

We drive a lot more miles than people in other countries do, and are therefore much more likely to get involved in accidents. When we do, it is nice to be sitting in an SUV instead of those eggshells they call sedans.
Posted by: Zhang Fei   2004-1-8 7:10:52 PM  

#18  Yo TGA, the VW Golf is just too damn small. So is the Jetta. Beamers and Benzies are just too damn expensive. Japanese cars suck. Chrysler...nahh. That leaves the big ol' Lincoln Navigator, yeahhh!!!
Posted by: Rafael   2004-1-8 7:01:43 PM  

#17  Hell no, way faster!
Posted by: True German Ally   2004-1-8 4:55:13 PM  

#16  I better don't tell you what I drive!

Somehow I doubt it's a pick-up.
Posted by: Shipman   2004-1-8 4:49:14 PM  

#15  Shipman, I know... beautiful cars. But beautiful things cost you more, right? Same with women...

I better don't tell you what I drive!
Posted by: True German Ally   2004-1-8 4:22:40 PM  

#14   I have yet to understand what you need SUVs for on Californian freeways. Taxing gas guzzlers higher and energy saving vehicles lower doesn't hurt the traditional American mobility needs one bit.

Love ya TGA but you don't get it (yet). I'd don't care for SUVs myself. I prefer something long, low, white, open with major fins. Sort of like the Caddy Paul Newman drove in HUD. LOL.

Get out of the way, and let go of our oil.
Posted by: Shipman   2004-1-8 4:15:30 PM  

#13  First of all it would be a good thing to avoid the word "eurotrash". If Europeans used the word "ameritrash" I doubt you would appreciate that too much.

The IMF is hardly a European institution, it resides in D.C. and has traditionally followed U.S. friendly policies. We don't have to admire it as the fountain of wisdom but if the IMF starts to be concerned with the direction the U.S. economy is heading to, it should not be brushed aside in a heartbeat. If you read the whole report it is nowhere that aggressive as the Yahoo summary posted here may make you believe.

A weak dollar may benefit the U.S. economy at the moment and hurt Europe's recovery (at this level still manageable), but if the slide continues the U.S. will be hit harder. For the first time there is another world currency that may become increasingly popular as a reserve currency. Don't let international confidence in the dollar sink too low. It might not recover easily and a "hard landing" of the dollar will mean interest hikes in the U.S., shifting of reserves into the Euro, oil being traded in Euro (Russia is already thinking about it). The idea of letting the world pay for the U.S. deficit only works if the world maintains a general confidence in the U.S. currency. If profits from investments in U.S. stocks and bonds are eaten up by currency slides, Asian investors might get tired re-investing their dollars and they will rather convert them into Euros and invest in Europe. Stock markets here have been bullish as well in 2003.

If that happens, we're in for major turmoils. Both the U.S. and export oriented Europe can not want this. So if Bush gets reelected he should return to a strong(er) dollar policy.

Higher energy consumption taxes need not necessarily be bad as they tend to promote cars that consume less. I have yet to understand what you need SUVs for on Californian freeways. Taxing gas guzzlers higher and energy saving vehicles lower doesn't hurt the traditional American mobility needs one bit.
Posted by: True German Ally   2004-1-8 3:43:45 PM  

#12  An old budget tactic in the govt is to fully fund the 'wannas' and leave critical programs (Social Security) underfunded. IMF, UN, etc. are good targets, but there are many, many others out there. Let's put the rest of the government under the kind of microscope that DOD is under. NOT that DOD is perfect by any means, but they are more efficient than, say, HUD.
Posted by: rabidfox   2004-1-8 2:53:57 PM  

#11  Want to see the idiots squirm? Tell the IMF that, due to their complaints, we've re-examined our budget priorities, and decided that we really do need to do some things to reduce the deficit. The first thing we'll do is to end all financial support for the IMF (Hopefully we could get the government to pull its collective head out long enough to end all support to the UN and all its dozens of redundant and useless "agencies"). We'd probably be able to record the response from Mars.
Posted by: Old Patriot   2004-1-8 12:36:04 PM  

#10  The eurotrash is just freaking out because of the dollar. It means the U.S. debt that they're holding is becoming worth less (which is entirely different than 'worthless'). That is, unless they want to spend that $$$ in America rather than, say, monaco. I hate to give too much credit, but a war is a war, and a fiscal stick is usually better than a high-explosive one. The administration is sharing the pain one way or another.

Anyway, the IMF can go pound sand.
Posted by: 4thInfVet   2004-1-8 12:32:29 PM  

#9  Typical IMF wank job. Notice that in this article (and others where IMF intervention was 'requested') that they have a very short playbook to fix whatever ails an economy: 1) Raise taxes and / or 2) devalue the local currency.

It NEVER occurs (more likely ignored) to the IMF that cutting taxes to spur growth or reduce spending to eliminate deficits is a solution, because they're mostly statists.
Posted by: Raj   2004-1-8 12:13:47 PM  

#8  See my response (post) above. IMF my a**.
Posted by: Spot   2004-1-8 11:23:31 AM  

#7  "50% cut in Social Security and Medicare benefits"

If you are smart you would be well advised to plan on a 100% cut!
Posted by: Tom   2004-1-8 10:52:25 AM  

#6  Msg to IMF: Once you've got the rest of the world whipped into shape, we'll talk...
Posted by: snellenr   2004-1-8 10:51:29 AM  

#5  The researchers also said Congress should consider a tax on energy consumption, arguing that it would "help meet the administration’s environmental objectives while also providing substantial support for fiscal consolidation."

Why should these people give a rat's ass about how something is achieved? It's always easy for someone to call for more taxes when they don't have to answer to the voters. Just state the facts, state the objectives, and those tasked with doing the job will decide with public input on how it is to be done.

On a side note, why should the IMF give a damn about "environmental objectives"? WTF do they care about such things?
Posted by: Bomb-a-rama   2004-1-8 10:24:00 AM  

#4  Although federal tax cuts and spending increases since 2001 bolstered the global economy in the short run

I didn't notice any "bolstering". Also, spending increases DID occur in 2001, but cuts didn't occur until late 2002/early 2003.

"Supply side economics". "Laffer curve". The lefties do not hear the same words we hear when these are uttered. I think they hear static, or Big Brother's voice.
Posted by: Ptah   2004-1-8 9:46:38 AM  

#3  a tax on energy consumption hmmmm?
Sounds like a back-door Kyoto tariff
Posted by: Frank G   2004-1-8 9:45:39 AM  

#2  Which branch of the US government does the IMF fall under?

None? Oh. Never mind.
Posted by: Robert Crawford   2004-1-8 8:04:11 AM  

#1  Although federal tax cuts and spending increases since 2001 bolstered the global economy in the short run, the report said "large U.S. fiscal deficits also pose significant risks for the rest of the world.

I don't see the 'rest of the world' helping us to defeat terrorism and communism, so for my money the 'rest of the world' can go fuck themselves.

Allowing the recent tax cuts to expire by 2013 would reduce the budget shortfall by nearly half.

I got a better idea: Why not let's just bill the IMF for the deficit? We're down for that if they are.
Posted by: badanov   2004-1-8 7:57:56 AM  

00:00