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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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