IMF Warns U.S. Economy At Risk

The current message coming out of Washington is that in January 2013 after the 2012 election there will be automatic tax hikes and spending cuts to take effect.

The struggling economic state of the U.S. with its escalating national debt and devaluing fiat currency position is sending a distinct signal to financial analysts. Namely, if the proposed economic measures go through after the U.S. election it will result in an economic disaster.

Unless the Obama administration agrees to put forth new alternatives, the tax cuts of which were put in place under the Bush administration will expire next year. Resulting in budget cuts set to automatically take effect under a separate law that was put in place.

According to the IMF, 4 percent of the nations annual economic output would decline leaving the U.S. economy stalled or even declining further.

“Failure to reach an agreement on near-term tax and spending policies would trigger a severe fiscal tightening . . . with negative growth early next year and significant negative repercussions on an already fragile world economy,” the fund reported.

With Europe recently under the radar with the IMF over problems encountered out of financial actions taken to stabilize the euro and putting the eurozone at global risk, today their focus is on the world’s largest economy. The big problem it is facing is how to curb the increasing national debt without stymying economic growth. A challenge marred by current economic growth figures the fund places at a mere 2 percent.

The IMF recommended the U.S. slowdown the short-term position of new budget cuts and a slight increase to governmental deficit spending by allowing $100 billion to be spent on infrastructure. Funds of which would then go toward worker training programs and to the unemployed.

Europe is in an economic crisis of its own and has presented the U.S. with additional economic constraints through the reduction of exports. With these measures the eurozone is creating additional economic risks should their financial crisis escalate even further, and also presents the U.S. with additional financial problems.

The U.S. is coming to a difficult point with the forthcoming tax cuts under the previous administration going into effect in 2013. The IMF is proposing that the U.S. take the position of raising the debt ceiling, and also increase the tax revenue for Social Security system, along with raising the retirement age.

The U.S. is in a risky position with the Obama administration due to its deficit spending track record, lack of a balanced budget, and now automatic budget cuts set to go in effect soon.

There is much concern in the upcoming months before the end of the current administration as it continues to face issues with a nation struggling economically. It has been over 10 years since there was any economic relief in the U.S. when under the Clinton administration, 2000 to 2001 provided a balanced federal budget erasing the national deficit.

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