WASHINGTON (Dow Jones)--The International Monetary Fund said a deal to raise the U.S. debt ceiling is an important first step that averted global economic calamity and helped to reassure markets.
"Raising the debt ceiling means a severe economic disruption has been avoided, and the accompanying deficit reduction deal is an important step toward fiscal consolidation," IMF Managing Director Christine Lagarde said in a statement after the president signed the budget deal into law.
"By reducing a major uncertainty in the markets and bolstering U.S. fiscal credibility, this agreement is good for both the U.S. and the global economy," she said.
The spending cuts are appropriately phased and avoid undermining growth by not front-loading budget decreases, she said.
Now, lawmakers have to develop clear medium-term debt and deficit goals. Making government spending sustainable will require further cuts in entitlement programs and raising new revenues, Lagarde said.
Those targets are at the core of the political debate: while Republicans have fought fiercely against raising taxes, Democrats have been staunch opponents of major cuts to entitlements such as social security, Medicare and Medicaid.
In an IMF staff paper published in April, fund economists estimated the federal government would have to raise taxes by at least 35% and cut entitlements such as health care and Social Security by 35% simply to restrain the U.S.'s future budget crisis.
While the projected ballooning of future costs of entitlements as the so-called baby boomer generation enters old age isn't new, the IMF paper's quantifying just how much the federal government will have trim its balance sheets sheds fresh light on the political hurdles ahead.
Raising taxes and cutting spending on health care, Social Security, Medicare and Medicaid are some of the most sensitive issues for voters.
The IMF paper showed that if the government doesn't cut entitlements, it would have to raise taxes by 88% just to pay for their costs.
Source: http://online.wsj.com
"Raising the debt ceiling means a severe economic disruption has been avoided, and the accompanying deficit reduction deal is an important step toward fiscal consolidation," IMF Managing Director Christine Lagarde said in a statement after the president signed the budget deal into law.
"By reducing a major uncertainty in the markets and bolstering U.S. fiscal credibility, this agreement is good for both the U.S. and the global economy," she said.
The spending cuts are appropriately phased and avoid undermining growth by not front-loading budget decreases, she said.
Now, lawmakers have to develop clear medium-term debt and deficit goals. Making government spending sustainable will require further cuts in entitlement programs and raising new revenues, Lagarde said.
Those targets are at the core of the political debate: while Republicans have fought fiercely against raising taxes, Democrats have been staunch opponents of major cuts to entitlements such as social security, Medicare and Medicaid.
In an IMF staff paper published in April, fund economists estimated the federal government would have to raise taxes by at least 35% and cut entitlements such as health care and Social Security by 35% simply to restrain the U.S.'s future budget crisis.
While the projected ballooning of future costs of entitlements as the so-called baby boomer generation enters old age isn't new, the IMF paper's quantifying just how much the federal government will have trim its balance sheets sheds fresh light on the political hurdles ahead.
Raising taxes and cutting spending on health care, Social Security, Medicare and Medicaid are some of the most sensitive issues for voters.
The IMF paper showed that if the government doesn't cut entitlements, it would have to raise taxes by 88% just to pay for their costs.
Source: http://online.wsj.com
No comments:
Post a Comment