By Brett Rowland (The Center Square)
The International Monetary Fund has warned the United States that government spending and rising national debt are unsustainable and could harm the global economy.
The Washington, D.C.-based organization, which represents 190 member countries, also called the U.S. economy “overheating.” The debt warning was preceded by numerous high-profile calls to address the growing U.S. debt problem.
The International Monetary Fund’s latest Fiscal Monitor says “amidst rising debt, now is the time to restore sustainable public finances.”
in its latest world economic outlookThe IMF warned that the U.S. national debt and deficit could push up inflation.
The report stated: “The recent outperformance of the United States is undoubtedly impressive and is a major driver of global growth, but it also reflects strong demand factors, including a fiscal stance that is inconsistent with long-term fiscal sustainability.” “This increases the short-term risks of a deflationary process, as well as the long-term fiscal and financial stability risks of the global economy, as it risks pushing up global financing costs. Something has to give.
Pierre-Olivier Gurinchas, chief economist of the International Monetary Fund, said in a blog post that the United States must take a gradual approach.
“The recent strong performance in the United States reflects strong gains in productivity and employment, as well as strong demand in a still overheated economy,” he wrote. “This requires cautious, gradual easing from the Federal Reserve.”
David Walker, the former U.S. comptroller general and a member of the Main Street Economic Advisory Council, said Congress must act.
“The IMF is the latest independent entity to express concern about the U.S. federal government’s overspending and failure to take steps to restore long-term financial stability,” he said. “Despite this, our federal elected representatives continue to turn a blind eye to the soaring national debt and federal financial mismanagement. As Americans, We the People must engage our congressional representatives and demand that they take steps to restore sanity and sustainability to federal finances. .
Similar warnings about U.S. debt have come from within and outside the government.
In November 2023, Moody’s Investors Service provided the federal government with Credit outlook negativeThe reasons are huge deficits, high interest rates, and waning political interest in solving the national deficit. Two other credit rating agencies, S&P Global and Fitch, give the United States a credit rating of AA+. August 2023, Fitch Ratings Decide The government’s credit rating was downgraded by one notch from AAA, the highest level, to AA+. Fitch noted the U.S. government’s high national debt and deficit and “erosion of governance.”
In February, congressional watchdogs told President Joe Biden and Congress that the federal government was on an “unsustainable long-term fiscal path.”
this Report The U.S. Government Accountability Office highlighted these challenges. A February report from the Congressional Budget Office found that federal spending is expected to remain unsustainable for decades to come.
The U.S. Government Accountability Office report stated that “the federal government faces an unsustainable long-term fiscal path.” “We expect that if current revenue and spending policies do not change, the debt held by the public will more than double as a share of the economy over the next 30 years and grow faster than the economy in the long term.”
Co-organized with permission from Center Square.
