U.S. Lacks 'Credible Strategy' on Mounting Debts: IMF

The International Monetary Fund (IMF) said Wednesday that the United States lacks a "credible strategy" to get its public finances in order, and could jeopardize the global economy. The IMF is saying that the U.S. economy “appears sufficiently strong” to weather bigger spending cuts and tax increases, adding that the benefit of the stimulus package “is likely to be low relative to its costs”. “More sizeable reductions in medium-term deficits are needed and will require broader reforms, including to social security and taxation,” the IMF continued. The Financial Times reports that "In an unusually stern rebuke to its largest shareholder, the IMF said the US was the only advanced economy to be increasing its underlying budget deficit in 2011 at a time when its economy was growing fast enough to reduce borrowing." The IMF warning comes as the United States is struggling to put together a coherent strategy to combat its enormous deficit. President Obama has made recent concessions with the Congressional Republican majority, in the hopes that more progress can be made to bring finances back in line. The Financial Times report notes that "Having narrowly averted a government shutdown last week through a deal with congressional Republicans to cut $38.5 billion in spending from this year's budget, Mr Obama will today unveil his plans to rein in America's long-term deficits, which are driven by popular programmes like Medicare, Medicaid and social security." The U.S. was part of a 2010 pledge by the G20 for all advanced economies, excluding Japan, to halve their deficits by 2013.