IMF: U.S. Needs More Revenue, Spending Cuts For Credible Debt Reduction

(Rachelle Younglai) - Any effort by the United States to pare its massive public debt without bringing in more revenue and tackling expensive benefit programs will lack credibility, the International Monetary Fund said on Tuesday.

To show U.S. creditors and markets the government is serious about reining in the country's $14.7 trillion debt, the IMF said so-called entitlement programs, such as the Social Security retirement program, must be reformed.

U.S. credibility "could suddenly weaken if sufficiently detailed and ambitious plans to reduce deficits and debts are not forthcoming," the fund said.

"Any credible strategy will need to include entitlement reforms and higher revenues. Widening tax bases by phasing out tax expenditures would be a good place to start," it added.

The Obama administration on Monday unveiled a $3.6 trillion deficit reduction plan that steers clear of Social Security and does not make structural reforms to the Medicare health care program for the elderly.

At the same time, Republicans in Congress have made clear that they would oppose any plan that raises taxes.

The IMF said current low U.S. interest rates reflect the significant goodwill the United States has earned from investors even though there are fundamental weaknesses in the country's fiscal situation, suggesting Washington could see a reversal of fortune unless it puts a credible deficit reduction plan in place.

Conventional fiscal indicators such as deficits and debt ratios are no better for the United States than in many European countries that currently face significant market pressure, the fund said.

A special committee of U.S. lawmakers is grappling with how to cut at least $1.2 trillion from deficits over the next 10 years. The committee must come to agreement by late November or else deep spending cuts to domestic and military programs will automatically kick in.

The Obama administration would count on tax revenues for about half of its proposed budget savings. The plan, which needs congressional approval to become law, includes a minimum tax rate for people earning more than $1 million a year, a proposal that has drawn heavy fire from Republicans.

The IMF's fiscal affairs director, Carlo Cottarelli, did not condone the proposal but said that it was a legitimate tax policy goal "to make sure that the burden of taxation is distributed fairly."

(Editing by James Dalgleish)

Copyright 2011 Thomson Reuters. Click for Restrictions.

Comments

[Anonani]

06:32 AM on 09/22/2011

Logic is not anti-American.

[HopeWFaith]

12:52 AM on 09/22/2011

To the IMF, keep your bleeping thoughts off our so-called entitlement plans.

When our nation gets beyond the lie that we don't need regulations on derivatives or Wall Street, and begins to settle back into acting like a nation with a brain, we will do fine. What we need more of is logical steps that take the nation's infrastructure back to a goal of the best in the world, our education system back to the top of the heap, reforms that highlight the protections of the middle class, not those of Wall Street and Insurance Companies.

Talk about ponzie schemes. If the Insurance industry isn't a scheme to take money from the poor and keep it in the hands of the rich, I don't know what is. Talk about class warfare, this kid says, you aint seen nothing until you've understood the way Insurance works against families and individuals with little else in their lives but bills, bills, bills.

I'd like to tell the IMF where to place their comments on our "entitlements." We've got our hands full trying to keep our money out of rich corporate giants' hands, who want to take it away from us via schemes like the GOP keeps coming up with. Cutting taxes on corporate giants being one.

[westcoastsc]

10:06 PM on 09/21/2011

Austerity measures don't work.

http://www.bloomberg.com/news/2011-05-13/nobel-winner-stiglitz-warns-job-killing-austerity-measures-hurt-economies.html

[vippy]

05:23 PM on 09/21/2011

More revenue is easy if they would close the loophole that sends jobs overseas, that would be start, then provide jobs here, even if it is fixing our infrastructure, then people get money and they can spend and revenue flows to the government.  But Obama, the inexperienced and non-businessman, thought he could get away with increasing the productivity by cutting our workforce as pointed out in the new book, now sees he was on the wrong track.

[Bill Roth]

02:28 PM on 09/21/2011

Maybe we should put our social security program in the derivatives market. Then we could place bets on the the day it fails. When that happens we can ask the Government to bail out the program. As like the banks, it to is too big to fail. But, unlike the banks it is hard earned money taken by law from all United State workers. The banking concept is to protect all our money from would be robbers. But, as all have found out; they are the robbers. So, if the leaders and they won't; want to "privatize" a system that is funded dollar for dollar and risk the loss and then try and haircut the program thus eliminating the IOU's of 2.7 trillion. That might be the "cue de gras" If we need to generate revenue. Tax the trillions sitting in banks held by companies that were suppose to spend that revenue on the stimulation of a systemically fraudulent globalized housing market. Or better yet.... pull the revenue out of thin air!

[majbjb]

02:09 PM on 09/21/2011

The IMF still thinks the US gov't is credible regarding debt reduction??? Boy, are they idiots.

[cog702]

01:50 PM on 09/21/2011

Ways to reduce the debt. Hire more people to look for fraud. Pay them a percentage of fraud found. Pass draconian laws to punish people who commit any frauds against the government.

Cut the pay of congressmen by half. Elemenate their special health care coverages. Revoke their franking priverlages, disallow any housing or office payments.

Make it a capital crime to take money from anyone or any business and then sponcer a bill or vote in favor of any legislation favoring that person or business.

[des946]

02:29 PM on 09/21/2011

You have some good points about combating the pervasive frauds that are the cancer of our society. How about requiring "full disclosure and transparency" i both government and corporations"? there is a basis for trade secrets; but that should not extend to the orchestration of financial frauds. Politicians and ALL government employees should have the same retirement palns, medical insurance as the average Americans . . . no more special retirement palns or insurance for government workers. Congressmen should have to provide full disclosure and transparency to political donations, and their personal taxes also. No ne can deny anyone's right to profit under our capitalistic system . . as longas it is legal, ethical, and moral. Corporate management must be held to be personally accountable for malfeasance and misfeance. All loop hoes and exemptions for special interests must be terminated.

That would be a tremendous advance for "recovery" on a permanent basis.

[katyland]

08:21 PM on 09/21/2011

Can not agree with the capital crime part, but do agree with the rest, politians created this mess ,politians should share the pain,

[cog702]

12:56 PM on 09/22/2011

Not many would be found guilty. They own the judges.

[cog702]

01:38 PM on 09/21/2011

The let-em die toxic tea baggers agree. Ryan wants to rase taxes on the middle class by 50%. But not one dime to the most rich.

[majbjb]

02:10 PM on 09/21/2011

And you know this how? Thru telepathy with space aliens or do you actually have a link/reference??

[Justicemyne]

01:14 PM on 09/21/2011

"The Obama administration on Monday unveiled a $3.6 trillion deficit reduction plan that steers clear of Social Security and does not make structural reforms to the Medicare health care program for the elderly"

Social Security and SSI are two separate funds. SS is funded by the money we put into it. SSI is funded by our income taxes paid AND corporate taxes. When they talk about SS reform, they should point to SSI. That is the area that needs reform.

So, if he raises taxes on the wealthy, do you think that will create jobs? The majority of it will get put into the SSI fund for those that are abusing the system.

If they have responsible spending cuts, that will create revenue, but for every dime they save, they spend a dollar.

Spending foolishly creates the need for raised taxes on everyone. Obama is going to spend one hundred million dollars on building a prison in Afghanistan. Where is that money coming from? Corporate taxes?

http://www.salon.com/news/afghanistan/?story=/opinion/greenwald/2011/09/19/bagram

[pmoschetta]

01:31 PM on 09/21/2011

Obama isn't spending anything without the approval of Congress, Justicemyne

[Justicemyne]

01:50 PM on 09/21/2011

Looks like he got it. Actually, I think he would have done it with or without approval of Congress. Maybe this is his grand plan of creating jobs. Wonder where I can put in my application and what the job pays.

Proposals will be received in hard/paper copies only. Electronic and fax proposals will not be accepted.

PROPOSAL PERIOD: The solicitation is scheduled for release on or about October 18, 2011. The proposals will be due on or about November 17, 2011. Contract award will be on or about December 30, 2011.

[watchclock]

01:51 PM on 09/21/2011

He just uses the executive order system to do what he wants. For your info please read this. It is long but explains how the US is still considered to be at war. Under war he can pass and do anything he sees fit.

http://www.lewrockwell.com/hornberger/hornberger117.html

[tcperrin]

12:47 PM on 09/21/2011

http://youtu.be/cG_TKAJyV6k

[hgoodguy]

11:44 AM on 09/21/2011

Has anyone noticed that the smartest minds in World Financial Affairs have said the the US must have revenue to offset spending cuts and the the Republicans who live in a bubble say No?

[katyland]

08:24 PM on 09/21/2011

Do not forget the cuts to entitilments,, both must be done,, and the tax has to be broad reaching, another words not just the extreme rich.

[dayzee10]

11:42 AM on 09/21/2011

Egads!!! That picture scared me for a second I thought Jan"the man"Brewer was put in charge of the IMF.Phew!!

[mavpay]

11:40 AM on 09/21/2011

Cancel poor and middle class debt. Hold those within the financial industry criminally responsible. Elect representatives who will vote for "real " campaign finance reform. Every member will receive the same amount of money. Business interests cannot exceed the public's contributions. Representatives must live together in "public" housing provided by the people. (Some new members are currently living in the capitol) Representatives' salaries cannot exceed the median income in their districts. There should be a cap on those who are in wealthier districts. Raise taxes on the billionaires and millionaires. End subsidies to major oil, energy and gas. End subsidies to major government contractors. End contracts to those who cheat the govenment. End these wars. Start treating people humanely in the US and worldwide. Do not support allies who treat others inhumanly. Stop unfair trade agreements. Promote fair trade. Promote justice. Change the statistics that show a family of four is below the poverty level at an income of $22,000 per year. Most reasonable people know that number is too low. Last but not least, PUTAMERICA BACK TO WORK and pay REAL WAGES!

[tcperrin]

12:41 PM on 09/21/2011

It's refreshing to know there are those who "get it"...http://youtu.be/bRVHHAjQDnE

[lulutin]

11:07 AM on 09/21/2011

I read a lot here about flat tax... lets say 10%.. 10% when you have barely enough to pay for food and rent aint the same as 10% when you have the choice between a mazeratti or the lastest BMW this month..

[majbjb]

02:15 PM on 09/21/2011

If you have barely enough to pay for food and rent than you shouldn't be paying any taxes at all. Unless your paying for the BMW and other non-necesseties first.

[iam99]

10:14 AM on 09/21/2011

The Constitution rules. Issue debt-free money!
IMF go just causes damage wherever they are.

[joebhed]

01:06 PM on 09/21/2011

Amen.
Problem solved.