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Thread: IMF chief says U.S. needs blend of spending cuts, revenue raising

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    IMF chief says U.S. needs blend of spending cuts, revenue raising

    From Reuters:

    The United States needs a balanced, comprehensive approach to tackle its fiscal woes that should include a mix of spending cuts and revenue increases, the head of the International Monetary Fund said on Sunday.
    "My view, personally, is that the best way to go forward is to have a balanced approach that takes into account both increasing the revenue, which means, you know, either raising taxes or creating new sources of revenue, and cutting spending," IMF Managing Director Christine Lagarde said in a pre-taped interview on CNN's "State of the Union," which aired on Sunday.
    IMF chief says U.S. needs blend of spending cuts, revenue raising | Reuters

    Hopefully, the IMF Director-General's perspective will carry some weight in Washington. If the fiscal cliff situation is to be resolved in an effective manner and, more importantly, if the U.S. is to develop a credible and effective fiscal consolidation strategy, Washington's policy makers will need to focus on pragmatic realities. They will need to do so even if it requires them to give greater weight to best practices (and there are examples of successful fiscal consolidation efforts available in the international experience) than entrenched ideology or ideologically-driven assumptions.

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    Re: IMF chief says U.S. needs blend of spending cuts, revenue raising

    I think both sides need to compromise. I think the best plan would be to eliminate the tax loopholes on some businesses that can get away with paying very little taxes and on some very wealthy individuals that can work the financial system to do the same thing. On the flip side I think we also need to reform and cut entitlement/welfare spending.
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    Re: IMF chief says U.S. needs blend of spending cuts, revenue raising

    Shouldn't we first state what our interest payments to banks will be this year, then decide if those interest payments could be reduced. Next, even though it would be advantageous to the Military/Industrial/Corporate complex, let's not attack anybody in the coming year, and lower the Military OFFENSE budget accordingly. Absolutely get rid of the 'welfare queens" starting with Nuclear Power and Fossil Power subsidies, and not to forget many of the Military/Industrial welfare queens. Raise taxes to pre-Bush ( Ruth Marcus: The shifting line on tax cuts - The Washington Post ), Social Security Retirement is not an entitlement, but a prepaid retirement. Initiate a referendum to see if the citizens of the USA want to starve the poor and remove their medical care because those costs are unjustifiable. These suggestions are just starting points.

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    Re: IMF chief says U.S. needs blend of spending cuts, revenue raising

    Quote Originally Posted by digsbe View Post
    I think both sides need to compromise. I think the best plan would be to eliminate the tax loopholes on some businesses that can get away with paying very little taxes and on some very wealthy individuals that can work the financial system to do the same thing. On the flip side I think we also need to reform and cut entitlement/welfare spending.
    I believe a measure of entitlement reform is essential. The easiest approach would be to agree on an increase in the age of eligibility. By easiest, I mean the approach that has the least adverse immediate macroeconomic impact. Other parameters i.e., copayments, means-testing, etc. should be in the mix.

    In terms of tax revenue, I'm flexible as to the approaches taken to raise the agreed revenue. Tax reform that increases efficiency might be a good starting point, but some measure of rate changes might also be necessary. In general, though, the broader the tax base, the less the rate changes would need to be.

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    Re: IMF chief says U.S. needs blend of spending cuts, revenue raising

    Quote Originally Posted by DaveFagan View Post
    Shouldn't we first state what our interest payments to banks will be this year, then decide if those interest payments could be reduced.
    There are limits to how much the interest payments can be reduced. The U.S. could try to shift more of its payments to the shorter-end of the yield curve, but that could lead to vulnerability once rates begin to rise from the currently historically low levels. However, even if the U.S. were to shift dramatically toward that end of the yield curve, demand might not be sufficient to avoid a rise in those interest rates. I don't believe such an approach is prudent, especially when one considers that interest rates are probably at or near their bottom. Numerous indebted countries have tried to shorten their average maturity only to be hit hard once interest rates began to rise. At that point, they wound up in a liquidity crisis that would have been avoidable had they maintained longer maturities that they did not need to roll over as quickly.

    Next, even though it would be advantageous to the Military/Industrial/Corporate complex, let's not attack anybody in the coming year, and lower the Military OFFENSE budget accordingly.
    I don't believe the U.S. needs to go to war in the coming year. It certainly should avoid commitments in civil conflicts e.g, the ongoing civil war in Syria. However, this isn't a fully controllable matter, so there is always a degree of risk.

    Social Security Retirement is not an entitlement, but a prepaid retirement. Initiate a referendum to see if the citizens of the USA want to starve the poor and remove their medical care because those costs are unjustifiable.
    Very few responsible political leaders would want to eliminate Social Security. Today, the program is underfunded. Moreover, there is no prefunded "trust fund" in terms of concrete assets so to speak. Payroll taxes have been used to acquire a special class of Treasury Securities and those securities will need to be cashed in to maintain the program's obligations. The program has also been expanded beyond its original parameters and that expansion has also entailed additional net costs. Fortunately, unlike with Medicare, the actuarial changes required to sustain Social Security are relatively modest (benefits indexed to inflation, gradually increased age limit, increased payroll tax ceiling indexed for inflation, modest payroll tax hike to fund the difference, etc.)

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    Re: IMF chief says U.S. needs blend of spending cuts, revenue raising

    Quote Originally Posted by donsutherland1 View Post
    From Reuters:



    IMF chief says U.S. needs blend of spending cuts, revenue raising | Reuters

    Hopefully, the IMF Director-General's perspective will carry some weight in Washington. If the fiscal cliff situation is to be resolved in an effective manner and, more importantly, if the U.S. is to develop a credible and effective fiscal consolidation strategy, Washington's policy makers will need to focus on pragmatic realities. They will need to do so even if it requires them to give greater weight to best practices (and there are examples of successful fiscal consolidation efforts available in the international experience) than entrenched ideology or ideologically-driven assumptions.
    While I agree with the premise of the solution needed, did Bowles-Simpson carry any weight ? While the GOP would be wise to embrace it fully at this point, it still gets lip-service at best. It was Obama's project, and when they came in with lowered rates for all (including the millionaires and billionaires), while cutting loopholes, creating a net revenue increase, almost exactly as the GOP has advocated, Obama and the spineless Dems made the two chrome-domes (both Simpson and Bowles are hair-challenged) as bushy red-headed stepchilds !

    I would hope that the GOP lets Obama take us off the cliff until Obama embraces such as a Simpson-Bowles approach. But they won't.

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    Re: IMF chief says U.S. needs blend of spending cuts, revenue raising

    Quote Originally Posted by DaveFagan View Post
    Shouldn't we first state what our interest payments to banks will be this year, then decide if those interest payments could be reduced. Next, even though it would be advantageous to the Military/Industrial/Corporate complex, let's not attack anybody in the coming year, and lower the Military OFFENSE budget accordingly. Absolutely get rid of the 'welfare queens" starting with Nuclear Power and Fossil Power subsidies, and not to forget many of the Military/Industrial welfare queens. Raise taxes to pre-Bush ( Ruth Marcus: The shifting line on tax cuts - The Washington Post ), Social Security Retirement is not an entitlement, but a prepaid retirement. Initiate a referendum to see if the citizens of the USA want to starve the poor and remove their medical care because those costs are unjustifiable. These suggestions are just starting points.
    I have to agree with you on everything you said. I also have no clue why some people call SS an entitlement. Cutting social security will do nothing to lower the debt. It is a seperate issue from the fiscal cliff. Cutting social welfare programs will only hurt the economy rather than help it and will cause needless suffering.
    I'm with you on cutting the real welare queens, the corporations that cost the tax payers money but will not help the economy by providing jobs in the US. The CEOs paying themselves million dollar bonuses and laying workers off. Wall Street that played fast and lose with the economy and got bailed out. Lets do some common sense cutting on the budget.

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    Re: IMF chief says U.S. needs blend of spending cuts, revenue raising

    Quote Originally Posted by donsutherland1 View Post
    From Reuters:



    IMF chief says U.S. needs blend of spending cuts, revenue raising | Reuters

    Hopefully, the IMF Director-General's perspective will carry some weight in Washington. If the fiscal cliff situation is to be resolved in an effective manner and, more importantly, if the U.S. is to develop a credible and effective fiscal consolidation strategy, Washington's policy makers will need to focus on pragmatic realities. They will need to do so even if it requires them to give greater weight to best practices (and there are examples of successful fiscal consolidation efforts available in the international experience) than entrenched ideology or ideologically-driven assumptions.
    Lets see...

    IMF = UN in certain people's minds.
    Legard = French
    Both = foreigners cant tell us anything useful because we are superior to everyone else.

    So... chances are 0% to 0%....
    PeteEU

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    Re: IMF chief says U.S. needs blend of spending cuts, revenue raising

    Quote Originally Posted by PeteEU View Post
    Lets see...

    IMF = UN in certain people's minds.
    Legard = French
    Both = foreigners cant tell us anything useful because we are superior to everyone else.

    So... chances are 0% to 0%....
    You are sadly right that many will perceive it this way. I do have to say I have a very bad knee jerk reaction in a negative way to anything the IMF says though because in my mind IMF = austerity and privatization things i do not like.

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    Re: IMF chief says U.S. needs blend of spending cuts, revenue raising

    Quote Originally Posted by hikari View Post
    You are sadly right that many will perceive it this way. I do have to say I have a very bad knee jerk reaction in a negative way to anything the IMF says though because in my mind IMF = austerity and privatization things i do not like.
    Which is ironic because that is exactly what the most negative towards the IMF and foreigners among the American political elite want...
    PeteEU

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