[FoRK] IMF: U.S. deficits threaten world finance
Contempt for Meatheads
jbone at place.org
Thu Apr 15 11:59:20 PDT 2004
So not only are we the biggest threat to world peace under this
misadministration --- we are also a serious threat to global economic
stability due to the fiscal irresponsibility of these borrow-and-spend
Big Government (Faux) "Conservatives." (I choke every time I have to
use that word to describe these idiots.)
IMF: U.S. deficits threaten world finance
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By Martin Crutsinger
April 15, 2004 | WASHINGTON (AP) -- Uncontrolled U.S. budget deficits
would pose a serious threat to global prosperity in coming years as
rising interest rates depress economic growth in the United States and
around the world, the International Monetary Fund warned Wednesday.
The IMF released a new analysis that predicted if nothing is done to
get control of the soaring U.S. deficits, it would shave global
economic output by 4.2 percent by 2020 and reduce U.S. economic growth
by 3.7 percent during the same period.
IMF economists said much of the adverse impact would occur because of
increased borrowing demands in the United States to finance the budget
deficit. This would drive up U.S. interest rates and interest rates in
other countries as the global supply of available capital is reduced,
"The rest of the world is affected seriously by the U.S. fiscal
deficit," IMF chief economist Raghuram Rajan told reporters in a
briefing on the new report.
The IMF's forecast that the U.S. budget deficit will be a significant
drag on growth reflected what will occur if there is no improvement in
the deficit, which the Bush administration projects will hit $521
billion this year, a record in dollar terms, and show little
improvement in coming years.
President Bush submitted a budget to Congress this year which projects
that he will be able to cut the deficit in half over the next five
years, reducing it to a shortfall of $237 billion in 2009.
The IMF said that if Bush is able to accomplish such a reduction in the
budget deficit, it would significantly lower but not eliminate the
adverse effects from the deficit on the U.S. and global economies.
It saw a long-run impact from such a budget reduction as reducing
global economic output by 2.55 percent, compared to a reduction of 4.2
percent under the worst-case scenario in which the deficit remains at
the current record levels.
Under the Bush program to reduce the deficit, U.S. economic growth will
be depressed by 1.88 percent in the long-term, compared to 3.68 percent
under the more adverse deficit path.
However, the IMF said that if the United States decided to pursue more
rapid deficit reduction, the adverse drag on growth would be greatly
reduced to just 1.03 percent in the long-term in the United States and
1.47 percent worldwide.
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