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IMF to US: Cut Social Security

Comment: Does the GOP run the IMF? That might be a conclusion one might draw from the IMF’s contention that the U.S. should cut Social Security benefits, in order to reduce its deficit. Guess we can add IMF to the list of individuals and institutions that want lots of impoverished, desperate elderly and disabled.

The following article also mentions raising consumption taxes…there doesn’t seem to be any recommendations targeting the ultra wealthy, however.  What a shocker!

“IMF Urges U.S. to Consider Higher Taxes, Social Security Cuts” by Tom Barkley; The Wall Street Journal; 7/8/2010.

Excerpt: The International Monetary Fund advised the Obama administration to consider raising taxes and reducing Social Security benefits as ways to contain the U.S. budget deficit and public debt.

In its annual review of the U.S. economy, the IMF forecast that the economy will grow 3.3% this year, and then not top 3% annual growth over the following five years, a more pessimistic outlook than that of the U.S. administration. As a result, the IMF projections of the deficit and debt top White House forecasts.

“We see a less strong growth outlook over the medium term than the authorities,” said David Robinson, the IMF’s deputy director for the Western Hemisphere. “Correspondingly, we see over the medium term…a need for more fiscal measures than the authorities at present do.”

The administration has pledged to halve the deficit by 2013 and to stabilize the public debt at 70% of gross domestic product by 2015. However, the IMF projects that current policies would push the debt level up to 95% of GDP by 2020 and above 135% by 2030.
Thus far, the U.S. has been able to borrow cheaply to fund its deficit in part because of fears of economic instability elsewhere in the world. Over the coming three to five years, though, the IMF believes that the interest rates on Treasurys will rise, as U.S. government competes with the private sector in debt markets.

The IMF urged the administration to cut the budget deficit by about 8% of GDP by 2015, which is nearly three percentage points more than the administration plans.

Spending cuts aren’t sufficient, the IMF said, and it suggested a number of politically difficult ways of reducing debt, including eliminating the popular deduction for interest on mortgages, raising energy taxes, reducing Social Security benefits or imposing a national consumption tax. . . .

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