WASHINGTON — The International Monetary Fund warned US leaders that hitting the looming “fiscal cliff” would not only crush the American economy but spin havoc through the rest of the world.
The US needs to shrink its huge fiscal deficit over the medium term but steep spending cuts and tax hikes scheduled for January are too extreme, and are already sending worries across the globe and hitting growth, the IMF said.
The IMF said, in its global economic report released in Tokyo, that the US could plunge back into recession if policymakers fail to agree a way to avoid the poison-pill plan to cut the country’s deficit and debt.
“Growth would stall in 2013 with the full materialization of the cliff and… would inflict large spillovers on major US trading partners and also on commodity exporters,” the Washington-based global lender said.
The Fund warned the US economy is likely slow slightly next year from this year’s forecast 2.2 percent expansion even if the cliff plan is avoided.
Growth has lost momentum, it said, with one factor being the uncertainty related to the outlook for government plans and the eurozone crisis.
The IMF conceded that worries wrought by uncertainty in Europe could help the United States, as capital has moved to the safe-haven dollar, helping to keep US interest low despite the government’s hefty debt burden.
However, the IMF warned, this can also drive up prices, hurting the country’s exports.
But most worrisome is the so-called “fiscal cliff”, an impossible political compromise agreed last year as Democrats and Republicans battled without conclusion over how to close the fiscal deficit over the medium term.
The plan forces deep, immediate spending cuts on the government from January 1, while raising taxes which will crunch household spending.
Legislators are under pressure to come up with an alternative before the end of the year. But, with Congress now on recess ahead of the November 6 national elections, there will be little time to fashion a more moderate plan before the deadline.
If implemented, the IMF said, the plan could cut four percent from gross domestic product.
“It is imperative to avoid excessive fiscal consolidation in 2013, to raise the debt ceiling promptly, and to agree on a credible medium-term fiscal consolidation plan.”
Rachel Maddow unleashes hellfire on Trump’s long history of appointing shady characters to his cabinet
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First, Maddow noted, former Trump campaign chair Paul Manafort unsuccessfully tried to get a bank CEO he struck a corrupt deal with to the Pentagon — only for that CEO to himself be arrested and charged with a federal crime.
"Don't worry, though, they had a plan 'B,'" said Maddow. "The president found another guy to nominate for that same job ... That announcement, Vinnie Viola, that plan "B" seemed to be going well until this part of that nominee's track record was released by the local police department in Saratoga Springs, New York. A police incident report about the new Trump Army Cecretary nominee punching a guy out at a high-end horse auction in Saratoga Springs ... less than six months before Trump announced him as his plan 'B' nominee to be Secretary of the Army. I guess they didn't Google him."
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Trump first complained about Medicare for All, which would expand the popular health care program for seniors to those below age 65.
"America will never be a socialist country," Trump argued, to applause.
"Republicans do not believe in socialism," he argued. "We believe in freedom, and so do you."
"We will defend Medicare and Social Security for our great seniors," Trump bizarrely said next.
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"And I am profoundly thankful to my family, I have a great family. Melania, Don, Ivanka, Eric, Tiffany, baron, Lara, Jared, Robert, Marianne, Elizabeth and my late brother, Fred, Jr." Trump said.
Fred, Jr. was Trump's older brother and died of a heart attack almost four decades ago, passing in 1981.
"In a telephone interview last week, Mr. Trump said he had learned by watching his brother how bad choices could drag down even those who seemed destined to rise," The New York Times reported in 2016. Seeing his brother suffering led him to avoid ever trying alcohol or cigarettes, he said."