IMF and Bill Clinton warn of excessive U.S. debt

Washington, D.C., United States (AHN) – An international agency and a former president warned the U.S. about the perils of its excessive spending on Wednesday.

The International Monetary Fund pointed out that the U.S. debt burden is on an unsustainable trajectory, but advised Washington against a sharp correction to protect its fragile economic recovery.

In its yearly review of the American economy, IMF urged U.S. officials to reach an agreement on a deal to raise Washington’s borrowing limit.

The IMF estimated that the U.S. budget deficit would hit $1.4 trillion this year, higher than last year’s $1.29 trillion gap. However, it is slightly lower than the record-high $1.41 trillion registered in 2009.

The fund also forecast a lower economic expansion this year for the U.S. at 2.5 percent and 2.7 percent for 2012. It is lower than the U.S. Federal Reserve’s projection of a 3.3 percent gross domestic product growth rate next year.

Former U.S. President Bill Clinton made a similar warning on Wednesday in his address at a conference on job creation.

He said the U.S. spent too much money and continues with such a policy that there might not be enough funds left for the future. Clinton also said at the first panel discussion at the Clinton Global Initiative two-day conference in Chicago that Washington is borrowing too much, which would create more problems later.

The former president suggested a better mix of federal spending and taxes as a proportion of U.S. GDP. He stressed the federal government could no longer afford to spend 25 percent of the country’s GDP on government expenditures, but tax only 15 percent of the GDP.

The two separate warnings come amid a deadlock between President Barack Obama and congressional Republican leaders over how to reduce the budget deficit and reach an agreement that would raise the U.S. borrowing limit.

View full post on All Stories