The head of the International Monetary Fund on Thursday urged the United States to quickly raise its debt ceiling, while putting a better medium-term debt reduction strategy in place.
IMF Director Christine Lagarde urged the U.S. to stop making “avoidable policy mistakes,” an allusion to the 2011 debt-ceiling standoff that crashed equity markets and cost $19 billion, and the “fiscal cliff” tax standoff that injected uncertainty into the economy late last year.
“For the United States we think that all sides should pull together in the national interest, avoid further avoidable policy mistakes – that is failing to agree on increasing the debt ceiling on time – and prior to that preferably – and reaching an agreement medium term debt reduction,” Lagarde said in a New Year’s press conference.
She said that in the U.S., “spending cuts are necessary.”
“It’s obvious,” she added. “They should be sufficiently anchored in order to remove uncertainty around them. They should clearly touch on entitlements among other things.”
Lagarde said that globally, economic collapse from the 2008 financial crisis and years of turmoil in the European Union has been avoided.
“Often at the last hour the right decisions have been made,” she said. “Our sense is that there is still a lot work to be done.”
She urged financial regulators not to “relax.”
“We sense a sign of waning commitment,” she said. “We believe it is important for the regulators to resist aggressive industry pushback.”
She said that regulations on the shadow banking system and on derivatives need to be accelerated. The Hill
FACTS & FIGURES
On Monday Dec. 31, 2012, Treasury Secretary Timothy Geithner formally notified Congress that the United States has reached its $16.4 trillion debt ceiling. The Washington Post
Behind Obama, the Democrats want a clean debt-ceiling hike without the burden of extraneous budget provisions that could prolong the debate and scare the markets. Republicans, on the other hand, view the debt-ceiling hike as a rare leverage point in their effort to win significant spending cuts from the Democrats. The Hill
The Bipartisan Policy Center (BPC) has estimated that the U.S. will begin defaulting on its payment obligations between Feb. 15 and March 1, unless Congress raises the $16.4 trillion debt ceiling. The Hill
The chief executive of the U.S. Chamber of Commerce has said the “exploding national debt” is the greatest threat to the U.S. economy. The Hill
The estimated population of the United States is 314,254,917 so each citizen’s share of this debt is $52,313.08. brillig.com
The National Debt has continued to increase an average of $3.83 billion per day since September 28, 2007!