International criticism rises over uncontrolled U.S. debt

Washington, D.C., United States (AHN) – Concern and criticism are rising from abroad as difficulties of the U.S. government in controlling its debt threaten international markets.

So far this week, the Russian prime minister accused U.S. economic planners of “hooliganism” and the chief economist for the International Monetary Fund criticized Congress for lacking a “credible” plan for escaping more than $14 trillion in debt.

On Tuesday, China urged the U.S. government to take “responsible” steps to control its debt. China owns more U.S. debt than any other country.

On Monday, the credit rating service Standard & Poors downgraded the U.S. government’s credit from stable to negative.

Meanwhile, Republicans and Democrats are fighting over whether to raise the nation’s debt ceiling.

The debt ceiling refers to the highest amount of debt the U.S. government can assume under the law.

At the current rate, the U.S. government will reach its $14.3 trillion debt ceiling on May 16, according to the U.S. Treasury.

Republican leaders said again Thursday they will agree to raise the debt ceiling only if they get guarantees of drastic spending cuts for the federal budget.

Democrats are reluctant to make cuts to programs such as Medicare and Social Security, which they say are vital to many households.

The unresolved dispute prompted International Monetary Fund Chief Economist Olivier Blanchard to tell the French magazine Le Monde, “There are reasons to be worried.”

“The United States lacks a credible plan, for the medium term, to reduce its budget deficit,” Blanchard said in the magazine interview.

“The ideological gap is huge between Democrats and Republicans on how to deal with the problem,” Blanchard said.

An International Monetary Fund report last week said U.S. debt could reach 100 percent of its gross domestic product by 2015 without drastic budget cutbacks.

Even harsher criticism came from Russian Prime Minister Vladimir Putin, who said during his annual address to parliament that “everything is not so good for our friends in the States.”

The U.S. economy is teetering as a result of a huge trade imbalance between imports and exports and growing annual budget deficits, he said.

Russia does not “have the luxury for such hooliganism,” Putin said.

He also accused the United States of flooding international markets with cash that lacks value because of the high debt.

The Treasury Department is buying back $600 billion in government securities in an effort to pump up the value of the dollar.

Mexican economists say the U.S. government’s inability to control its debt will result in increased cash flow into Mexico, an appreciation in the value of the peso, volatility in its stock market and higher unemployment.

Mexico’s economic trends are closely tied to the U.S. economy.

Gabriel Perez del Peral, an American University economist, said an increased value for the peso would slow Mexico’s exports.

“The change in perspective for U.S. debt will generate a greater appreciation of currencies for emerging markets and will complicate unemployment,” Perez told the Mexican news media.

He urged the Bank of Mexico to adopt cautious policies to protect the value of the country’s currency.

“The peso’s appreciation will generate greater unemployment and the economy will overheat, which will increase commodity prices,” Perez said.

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