International Monetary Fund: “Severe Shock” If Ceiling Is Not Raised In Time


The International Monetary Fund has released a dire warning about the impact defaulting on the national debt could have, not just for the U.S. economy, but for the entire world.

The Hill reports:

The U.S. should raise its $14.3 trillion debt ceiling to avoid “a severe shock” to the global economy, the International Monetary Fund (IMF) has warned.

In an annual report card on U.S. economic policy made public on Wednesday, the IMF said the debt ceiling should be raised as soon as possible to avoid damage to the economy and world financial markets.

Ironically, the IMF seems to have just as much issue coming up with the perfect recipe for a deficit plan as Congress is.  The group simultaneously warns about the pitfalls of “failing to achieve sufficient medium-term deficit reduction” as well as the dangers of “cutting too much too soon.”

IMF makes recommendations of a number of ways to raise revenue such as carbon taxes, value add taxes and stronger implementation of financial reforms, all of which are likely to be non-starters with the Republican House majority.  It also advocates increasing spending on job training programs, yet another lost cause with the “cut it all” Congress of 2011.

Related posts:

Daily Debt: Another Missed Deadline

Daily Debt: Ashes, Ashes, It All Falls Down

Daily Debt: Everyone Signs On To Pledge That Will Never Pass

Photo credit: revisorweb


Rob K.
Rob Keenan6 years ago

Enjoy the shutdown of highway projects funded by the federal government Bruce H !

Bruce H.
Bruce H6 years ago

I did read one blog that put forth the premise, if the government stopped, we would find out how little we really need them. Interesting idea. If my social security doesn't arrive, I'll tell the bill collectors to get it from Congress. Wonder how that works?

Danny Wilson
Danny Wilson6 years ago

Again: It's all BS. Raise taxes on the top ten and corpserations to 1961 levels the deficit is payed off in ten years. Problem solved. Don't forget to add a deficit tax on them too. P.S.: Go Barbara V. Go!

Frank S.
6 years ago

Here is a petition I came across today please help by signing it!

Tell the GOP: Stop Imperiling U.S. Economy

The Petition

I won’t stand by as Republican posturing over the debt ceiling threatens our economy. Republicans need to stop holding the economy hostage over their obsession to end Medicare, while keeping subsidies for oil companies.

Please sign the petition also send to your friends if possible, thanks!

Glenn M.
Glenn Meyer6 years ago

Cutting spending on, so called, entitlements is ineffective for addressing the deficit. Cutting programs that support the low and middle class will further strain both who don’t even receive lower prices as a result of the U.S. job losses and create a disconnect that will end in another financial collapse. The justification for attacking government benefits as opposed to raising taxes is the creation of jobs. But where?

Corporations have over-powered our government which now believes that out-sourcing and off-shoring of U.S. jobs is inevitable and necessary with expectations that the middle class should fall on their swords. It is the underlying cause of the financial collapse and borders on national security with the loss of our middle class tax base. Yet, this nation does nothing, not even demand it be restricted by whatever method. International businesses are doing the UN-AMERICAN activity of destroying U.S. salaries, U.S. businesses that hire in the U.S., and as an end result, destroying the U.S. marketplace while still demanding BUSINESS ENTITLEMENTS and protections for themselves.

Infrastructure spending and tax breaks will not replace enough jobs to keep up with the hemorrhaging loss of U.S. jobs from out-sourcing over seas. Neither party will do anything about it unless we begin grass roots efforts to protest out-sourcing and off-shoring of U.S. jobs. If nothing is done we will deserve what we get and it will get a lot worse before it gets better

Lloyd A.
Doug Alley6 years ago

Dianne has all of her facts straight. This whole fiasco is nothing more than a ploy by the Republicans to make President Obama look bad.The more damage they do, the better President Obama is going to look, but they are too stupid to grasp this fact. John Boner and his group of economic illiterates are going to do some very serious damage to the American economy if this BS goes through. You do not make changes in your well-being by shooting yourself in the foot, and that is just what they are doing.They may have already done too much damage as it is.

Dianne Robertson
Dianne Robertson6 years ago

Our problems today grew from the time Bush started wars on whims and Cheney said that deficits "Didn't matter'. Their buddys in oil and military hardware made a bundle.Does ANYBODY remember WHO presided over the bailout debacle? It had to do with the financial industry ...... remember McCain was so upset that he tried to call off a campaign debate so he could rush back to Washington to BAIL THE FATCATS out? We were told then that bail outs were necessary to save the world.The AUTO INDUSTRY recieved LOANS which have been repaid THE BANKS CAUSED the problem and made huge money on the BAILOUT.All this was on BUSH'S watch. Since then the Obama administration has been trying to get the ship OFF THE ROCKS. All this excitement NOW is a Republican PLOY to try to bring down Obama, THE debt limit and the budget are BOTH ROUTINE functions of the CONGRESS . They need to do their job. Pass the debt limit THEN raise taxes on the wealthy to balance the budget.

Edith B.
Edith B6 years ago

I personally am sick of the lot of them, senators, congressmen, and the administration. The last ten years have been a fiasco, with one party or the other in charge, both screwing up, then trying to blame it on the other. I have received an e mail several times lately that advocates term limits for the senate and congress, forcing them to be on Social Security and Medicare instead of the cushy pensions and health care they have now. I wish there was a way to make this real instead of a cyber wish.

Lloyd D. Alley
Doug Alley6 years ago

Bruce, the ship has been aground since the day we invaded Iraq. President Obama is merely trying to get it off the beach and back in the water.

Rob K.
Rob Keenan6 years ago

I already know enough of my history,Bruce H.,to know that FDR got this country through it's worst economic depression ever.