AP- The International Monetary Fund recently sounded the alarm on the Biden administration’s rampant spending as “out of
line with what is needed for long-term fiscal stability.”
The IMF’s latest forecast from the IMF — a group tasked with
fighting financial crises worldwide — warned that the ballooning national debt
and the fiscal deficit threatened to exacerbate sky-high levels of inflation
while posing a long-term risk to the global economy.
The IMF noted in its forecast that the US federal budget deficit
grew from $1.4 trillion in fiscal 2022 to $1.7 trillion last year.
“Something will have to give,” the IMF warned.
The IMF, a financial agency run under the auspices of the United
Nations, praised the US economy for its growth.
Despite rampant inflation, the US economy has continued
to add jobs while spending and income have been on the rise. In the fourth
quarter of last year, GDP rose at an annual rate of 3.3%. In 2023, the US
economy added 2.7 million jobs.
Nevertheless, the IMF said that the Biden
administration’s spending is cause for concern.
The exceptional recent
performance of the United States is certainly impressive and a major driver of
global growth,” the IMF said. “But it reflects strong demand factors as well,
including a fiscal stance that is out of line with long-term fiscal sustainability.”
Since entering office, Biden has spent trillions on COVID relief
as well as infrastructure. The US has also spent billions in helping Ukraine
fight off the Russian invasion.
But
the Biden administration said that tax cuts signed into law by former President
Donald Trump are to blame for ballooning debt.
“The
Trump tax cuts added $2 trillion to the debt with unpaid giveaways skewed to
the wealthy and big corporations, and now Congressional Republicans are
proposing another $5.5 trillion in tax cuts skewed to the rich, while raising
taxes on millions of middle-class families,” Michael Kikukawa, a White House
spokesperson, told The Post.
“President Biden is fighting to
lower the deficit by $3 trillion by making the richest Americans and big
corporations pay their fair share—all while cutting taxes for the middle class
and never raising taxes on households earning less than $400,000.”
The US is an outlier among the major industrial economies.
Europe’s economy failed to expand by the end of last year.
The 20 countries that use the
euro as a currency have not shown significant growth since the third quarter of
2022 — and even then the economy grew at just 0.5%. The eurozone grew 0.5% for
the full year in 2023, while the US grew 2.5%.
China, the world’s second largest economy, said late Monday it
grew a surprisingly strong 5.3% despite an ongoing property crisis. Russia,
which remains mired in its invasion of Ukraine, has managed to withstand
Western sanctions. Its economy is projected to grow at a 3.2% clip.
Weitz take: This is one I need to be a bit cynical and super straight forward on. 1) Do I think the USA can't keep 'printing money' (which is exactly what we do). No - I think we can and will. Frankly, most monetary systems are a bit of a ponzi scheme (that's something they don't teach you your school books). The biggest issue with this is WHO is SAYING THIS, WHAT THEY ARE SAYING and WHAT IT COULD MEAN.
For most of our lifetimes, our status as the major reserve currency of the world gives us the ability to print money without any major repercussions globally without having to deal with what should arguably be a weakened currency.
For the betterment of the US, we have held that status since the end of World War II. (see more on this concept here). The IMF controls which currencies make up this basket of currency that controls much of global trade. If they decide, for instance, that the Chinese Renminbi is a safer currency, the dynamics of all this would change and change dramtically. We couldn't print at infinitum without facing a severally weakened dollar in such a case. At the time of this writing, multiple countries making up the "BRIC alliance" are taking active steps to replace the dollar in this hierarchy of currency relevance. Frankly, this is by far the most important issue for the future of this country but we have too busy arguing about social issues that won't mean a darn thing if our currency collapses.
