IMF calls for U.S. Fiscal Restraint

Karla L. Miller of Tax Analysts writes:

The International Monetary Fund in a staff report on the U.S. economic outlook questioned whether the Bush administration’s medium- term goal of halving the deficit in five years is “ambitious enough”; the IMF’s suggestions for long-term fiscal security included imposing restrictions on tax cuts, broadening personal and corporate tax bases, raising energy taxes, and introducing a national value added tax…The report described U.S. President George W. Bush’s fiscal 2005 budget plan as providing a “welcome shift in policy emphasis towards fiscal consolidation.” The report noted that the president’s plan focuses on strict spending limits with the goal of making the 2001 tax cuts permanent…According to the report, the IMF directors also discussed the “severe underfunding” of Social Security and Medicare. Some cautioned against diverting a portion of the payroll tax into private retirement savings accounts — an approach favored by the administration.

Miller is actually telling us what we already knew as far as the need for long-term fiscal responsibility. If Bush is serious about reducing government spending, this is news to me. The June 28, 2004 report by Anoop Singh and Liam P. Ebrill does note that Bush’s formal proposals suggest reductions in spending growth, but also notes Congressional approval “is still awaited”. Is this like “the check is in the mail”?

Even with these proposed spending curbs in their forecasts, projects deficits remain at 2% of GDP for the long-term. But check out the IMF’s coverage of the U.S. macroeconomy in this report, which includes information on other economies as well here at:

(OK, this is the 2nd time the link function has not worked. My apologies).