Yesterday, Thursday, the International Monetary Fund urged the United States to increase taxes to control rising debt levels, while at the same time praising “strong and active” growth in the world’s largest economy and the progress being made towards controlling inflation.
The fund said in a concluding statement for the Article IV review of US economic policies that rising deficits and debts “pose a growing risk to the US and global economies, potentially leading to higher financing costs.”
The statement included a slight adjustment to the fund’s forecast for US GDP growth in 2024 – to 2.6% compared to 2.7% – in the World Economic Outlook report last April.
The IMF expects growth in the United States in 2025 to fall to 1.9%, unchanged from last April’s forecast, and to remain above 2% until the end of the decade.
“The US economy has proven to be strong, dynamic and able to adapt to changing global conditions,” the fund said.
He stated that he expects inflation in the United States – measured by the personal consumption expenditures price index – to return to the Federal Reserve’s target rate of 2% by mid-2025, which is a much closer time than the Central Bank’s expectations of returning to the target in 2026.
IMF Criticism of America
However, the Fund criticized Washington for the high deficit, which, if it continues, will lead to the debt-to-GDP ratio in the United States rising to an alarming level of 140% by the end of the current decade.
For the second year in a row, the IMF has recommended that the United States raise income tax rates not only on the wealthiest citizens but also on households earning less than $400,000 a year, a threshold that US President Joe Biden pledged during his election campaign not to touch.
The Wall Street Journal has warned that the US debt will exceed its GDP this year, a situation that portends bleak outcomes.
The American newspaper pointed out that in recent years, both former President Donald Trump and current President Biden oversaw similar increases in the national debt, about $7 trillion each during their terms.
