IMF to US: Better start taking care of business

posted at 10:40 am on January 29, 2011 by Ed Morrissey

You remember the IMF, right?  It’s the organization that had to partner with the EU in order to rescue Greece from its massive debt and collapsing bond structure — a task accomplished with around $7 billion from the US.  Now the IMF has a warning for the US as well, that our own debt is Greecing the skids to a similar but much more disastrous conclusion in the long term:

U.S. officials must act quickly to control government deficits or face slower growth and even more difficult choices in the future, the International Monetary Fund said Thursday in a report criticizing the tepid U.S. response to its rising public debt.

The IMF warning comes as federal officials grapple with a congressional projection this week that the annual deficit will reach a historic $1.5 trillion this year. This was the latest report to raise concerns about how massive government debts in developed countries could undermine the global economic recovery.

“The U.S. has a lot of credibility. This does not imply their credibility can last forever,” IMF fiscal affairs director Carlo Cottarelli said as he released the IMF study. It concluded that the United States is falling behind on a promise it made to other top economic countries to halve its budget deficit by 2013.

“This is a problem many years in the making and will take a concerted effort by Democrats and Republicans working together to find a solution,” White House press secretary Robert Gibbs said in answer to a question about the IMF report.

He noted that President Obama called for a freeze on discretionary spending during this week’s State of the Union address. IMF officials have welcomed the step but said that spending cuts in pension and health entitlement programs are also needed.

Offering the discretionary-spending freeze as an answer to the IMF’s legitimate concern is akin to telling your mortgage holder that you’ve started an austerity program by deciding not to buy more pay-per-view porn each month than in the previous few years.  Your lender would probably blink twice while deciding if you were serious, then congratulate you while wondering if someone has to come in each day to cut your food for you.

A freeze in discretionary spending isn’t a reduction; it’s an insistence on spending at the same level that got the country into the position that’s alarming the IMF.  As I wrote earlier this week, the White House is claiming that a freeze on non-security discretionary spending (which amounts to about 12% of the overall federal budget, by the way) will save $400 billion over the next ten years, but that’s simply not true.  It will save $400 billion over the next ten years at the rate the Obama administration wanted to increase spending.  It actually saves nothing at all, and in the absence of other changes, won’t affect the current deficit trajectory one single iota.

Besides, we have a $1.5 trillion deficit in this fiscal year, with deficits over the next decade projected to average over a trillion dollars.  That change would amount on an average annual basis to 4% of the deficits, leaving 96% of the deficits in place.  And since deficits accumulate debt, it gets worse from the IMF’s perspective each year that continues.

For the IMF, this is even more worrisome than the Greek default.  After all, the IMF could rely on the US to help backstop the bailout for Greece and perhaps other EU members on the ragged edge of default.  If the US starts to slide, there won’t be anyone to bail out America — and the IMF will be utterly destroyed in the collapse.  The IMF’s managers want the US to start taking the problem seriously, and they’re not seeing any indication of seriousness from the administration, especially not after the so-called spending freeze offered by Barack Obama this week conditioned on getting a slew of new government spending approved.

Note: I’m participating in a conference this weekend with Americans for Prosperity in San Diego, helping to boost online activism.  Yesterday was mostly a travel day for me, and today and tomorrow my blogging will be limited as well.  I hope you enjoy our guest bloggers in the meantime.


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takin care of business

cmsinaz on January 29, 2011 at 10:43 AM

IMF officials have welcomed the step but said that spending cuts in pension and health entitlement programs are also needed.

As if…

ladyingray on January 29, 2011 at 10:44 AM

Have fun Ed!!

cmsinaz on January 29, 2011 at 10:45 AM

IMF to US: Better start taking care of business

Reid/Schumer to IMF-Over our dead bodies.

artist on January 29, 2011 at 10:45 AM

If the US starts to slide, there won’t be anyone to bail out America — and the IMF will be utterly destroyed in the collapse.

not good

cmsinaz on January 29, 2011 at 10:46 AM

Wait.. we borrow from the IMF? and the IMF is warning the US to get our debt under control?

I thought we fund the IMF.

Skandia Recluse on January 29, 2011 at 10:48 AM

IMF officials have welcomed the step but said that spending cuts in pension and health entitlement programs are also needed.

We’re cool … Harry Reid and Chucky Schumer said there’s no problem. We’re in the black and have plenty of money. Van Jones said we have plenty of money too so back off … ok?

darwin on January 29, 2011 at 10:48 AM

Have a good time Ed. I have and do enjoy the guest bloggers.
L

letget on January 29, 2011 at 10:49 AM

Cloward Piven Strategy right on schedule.

Disturb the Universe on January 29, 2011 at 10:51 AM

So, did we borrow the $7B we loaned to Greece from the IMF?

Pattosensei on January 29, 2011 at 10:52 AM

So, did we borrow the $7B we loaned to Greece from the IMF?

Pattosensei on January 29, 2011 at 10:52 AM

more than likely

cmsinaz on January 29, 2011 at 10:54 AM

Join Americans for Prosperity Foundation for our regional RightOnline training seminar on January 28-29th at the San Diego Marriott Gaslamp Quarter. The training seminar will bring together an impressive lineup of America’s leading experts in new media, grassroots mobilization, and public policy for cutting edge training in online activism.

We’ll be joined by Conservative Commentator Andrew Breitbart, Talk Radio Host Roger Hedgecock, Fox News Contributor Stephen Kruiser, Conservative Blogger and Radio Host Ed Morrissey, and many other leading conservative voices.

Nice digs and great lineup.
I really miss Roger’s radio show since I left San Diego.

OmahaConservative on January 29, 2011 at 10:58 AM

IMF — ‘Your mission, should you decide to accept it, is to cut your deficit to zero. This device will self destruct in 5 seconds.’

Ebola administration — ‘Haha, good luck finding someone to carry out that impossible mission. My plan is to increase it!’

GnuBreed on January 29, 2011 at 10:58 AM

Cloward Piven Strategy right on schedule.

Disturb the Universe on January 29, 2011 at 10:51 AM

The inspiration for Cloward-Piven:

“……Any revolutionary change must be preceded by a change among the mass of our people. They must feel so frustrated, so defeated, so lost, so futureless in the prevailing system that they are willing to let go of the past and chance the future. This acceptance is the reformation essential to any revolution.”

-Saul Alinsky, in the prologue to “Rules for Radicals.”

Gettin’ there.

iurockhead on January 29, 2011 at 10:59 AM

Cloward-Pivven is a “backfire” …

It only works for leftists when a right wing government is in charge and screwing things up.

That’s not the situation we have at the moment. We have a LEFTIST government screwing things up. The backblow will occur in the opposite direction (and IS occurring in the opposite direction) – and that is, a rise in right wing activism.

We had a rule in Submarines … “If the widget falls apart while you’re holding it – YOU get the blame”.

Same will hold true here for the government – whoever’s in charge of it when it goes under will get the blame.

HondaV65 on January 29, 2011 at 11:11 AM

Offering the discretionary-spending freeze as an answer to the IMF’s legitimate concern is akin to telling your mortgage holder that you’ve started an austerity program by deciding not to buy more pay-per-view porn each month than in the previous few years. Your lender would probably blink twice while deciding if you were serious, then congratulate you while wondering if someone has to come in each day to cut your food for you.

Oh, Ed, that paragraph was perfect. I had to repeat it for you.

onlineanalyst on January 29, 2011 at 11:16 AM

own debt is Greecing the skids

Thanks Ed for initiating some takeoff in my mind of the “Grease” musical where John Travolta represents our free-spending ways and Olivia Newton-John our country’s honor, and how they’re irreconcilable unless we all break out into song.

Paul-Cincy on January 29, 2011 at 11:21 AM

I agree with the IMF. ANd one of the first things we need to do to reduce our debt is to cut spending to zero in certain areas- such as IMF itself.

michaelo on January 29, 2011 at 11:21 AM

Oh, and Ed, give that confab the benefit of your expertise. That looks like a great lineup for a great gathering of adult leaders.

onlineanalyst on January 29, 2011 at 11:21 AM

The US dollar continues to lose favor as the most widely held reserve currency in the world.

We are in for a world of hurt when we can no longer print money to deal with our debt.

I’m thinking of going long on oil and wheelbarrows…

Fallon on January 29, 2011 at 11:23 AM

I thought we fund the IMF.

Skandia Recluse on January 29, 2011 at 10:48 AM

We do, and the good folks down at the IMF want that money to keep flowing so they’re telling us to get our spending under control so that we can keep funding them. See, it’s just like all the other people that want the US to control spending, except if it affects them personally.

Kafir on January 29, 2011 at 11:24 AM

grassroots mobilization

Dude! Potluck at the grange hall on Sunday after church isn’t enough?

Skandia Recluse on January 29, 2011 at 11:28 AM

There’ll be plenty of opportunities for banks to offer new, hourly or minute-by-minute roll over CDs when hyper inflation hits.

That way, using your debit card, you won’t have to take barrels full of cash down to the grocery store to buy a loaf of bread.

That’s assuming you have cash now.

(Yes sir. We have a 30 second CD at 75%, er 85%, er 95% … interest. It compounds second by second. It will be rolled over in 30 seconds at the next, higher rate; which we estimate to be 250%).

BowHuntingTexas on January 29, 2011 at 11:29 AM

The amazing cowardice Obama put up for the world to see during the SOTU obviously spooked some people. I really laugh every time I read an article describing how it’s going to be to beat Obama in 2012.

Mord on January 29, 2011 at 11:33 AM

Raise taxes on everyone

Love,
-Bayam

Inanemergencydial on January 29, 2011 at 11:33 AM

. I really laugh every time I read an article describing how difficult it’s going to be to beat Obama in 2012.

Mord on January 29, 2011 at 11:33 AM

Woops

Mord on January 29, 2011 at 11:34 AM

The IMF’s managers want the US to start taking the problem seriously, and they’re not seeing any indication of seriousness from the administration

All those poor people – thinking Barry was going to lean right. Hahahahahaha!

Enjoy the weather here Ed. Projected high today will be 65 with lots of sunshine. The state sucks financially – but the weather is great!

GarandFan on January 29, 2011 at 11:34 AM

I have a feeling Obama’s poll numbers are about to act stupidly. As much as the Euros like to complain about the U.S. they need us to be financially secure. American voters are more aware than ever and they see the house of cards collapsing on the Obama’s watch. He will be lucky to get 40% of the vote in 2012. Unless we run a squish, that is.

pugwriter on January 29, 2011 at 11:35 AM

IMF giving us free advice and the UN telling us to lead on climate change. Why do we even have a govt when we could get all this free advice on how to tcb.

Kissmygrits on January 29, 2011 at 11:39 AM

Wisconsin freshman senator Ron Johnson delivers a wonderful GOP address this week. This is what adult, confidence-building, adult leadership looks and sounds like.

http://www.nationalreview.com/corner/258367/freshman-johnson-delivers-weekly-address-robert-costa

onlineanalyst on January 29, 2011 at 11:40 AM

It concluded that the United States is falling behind on a promise it made to other top economic countries to halve its budget deficit by 2013.

Halve… double… whatever.

logis on January 29, 2011 at 11:46 AM

Washington now borrows 40% of what it spends. Yes, bailouts, corporate welfare and earmarks need to go away, but it doesn’t address the three elephants in the room.

Can’t bring government expenditures in line with revenue without touching Social Security, Medicare, and military spending. And not the “let’s tweak COLA increases and cut Medicare reimbursements 5%” kind of touching.

We’re talking more along the lines of “we have to phase out entitlements and end most overseas military operations” type tweaking. Exactly the kind of massive changes to government structure that neither political party has the understanding of, much less the brass cojones to embrace.

TheMightyMonarch on January 29, 2011 at 11:57 AM

We all know Progressives want to bring America down to size………

? for America…….What better way to do it than collapse the American economic system and right all the wrongs, let the chickens come home to woost and show the world we mean them no harm?

Isn’t this just simple logic if they really all believe in the infallibility of their political thoughts and theories?

If so………whoa unto we serfs!!!

PappyD61 on January 29, 2011 at 11:59 AM

Offering the discretionary-spending freeze as an answer to the IMF’s legitimate concern is akin to telling your mortgage holder that you’ve started an austerity program by deciding not to buy more pay-per-view porn each month than in the previous few years. Your lender would probably blink twice while deciding if you were serious, then congratulate you while wondering if someone has to come in each day to cut your food for you.

Oh, Ed, that paragraph was perfect. I had to repeat it for you.

onlineanalyst on January 29, 2011 at 11:16 AM

That’s not really a perfect analogy. What Congress perversely calls “discretionary” spending are actually necessary services like defense and highway repair, etc.

It’s what congress perversely refers to as “entitlement” spending that is spiraling wildly out of control and crippling our productivity at the same time.

This is like someone with a rapidly growing crack habit telling his bank that he’s going to cut back on his food and electricity expenses. Of course it’s entirely possible the guy may be dining out or leaving his lights on too often. But that has absolutely nothing whatsoever to do with his REAL problem, or what must be done to fix it.

logis on January 29, 2011 at 12:02 PM

Ed, have fun at yur Confab!

Aunt Imogene luvs ya and sends you a big Hillbilly kiss!!

smmmmmmmocccchhhh!

PappyD61 on January 29, 2011 at 12:05 PM

We’re launching solar shingles into low Earth orbit as fast as we can, what else does the IMF want???

Bishop on January 29, 2011 at 12:07 PM

For the IMF, this is even more worrisome than the Greek default. After all, the IMF could rely on the US to help backstop the bailout for Greece and perhaps other EU members on the ragged edge of default. If the US starts to slide, there won’t be anyone to bail out America — and the IMF will be utterly destroyed in the collapse.

If we could guarantee the last,….

On second thought; the destruction of America is too high a price to pay for utterly destroying the IMF.

steveegg on January 29, 2011 at 12:07 PM

Oh, and Ed, tell Kyle I said hi.

steveegg on January 29, 2011 at 12:07 PM

Wait.. we borrow from the IMF? and the IMF is warning the US to get our debt under control?

I thought we fund the IMF.

Skandia Recluse on January 29, 2011 at 10:48 AM

Well, we fund the IMF with what we borrow from the ChiComs. The reason the IMF is worried about the US is the ChiComs and the Islamist oil fiefdoms won’t give them one thin dime directly.

steveegg on January 29, 2011 at 12:10 PM

I wish these international statists and marxists would make up their mind. On the one hand, they blame the US and our economic system for all the ills in the world and when we try to destroy it, they tell us to be more responsible so they can get more of our money and save their sorry asses…again.

Well, which is it?

RadClown on January 29, 2011 at 12:11 PM

Ed, enjoy San Diego! It’s beautiful there; Mr. PPF and I wanted to go back this year for a conference/seminar towards his license to practice; work won’t pay for continued education/licensing anymore *sigh*.

ProudPalinFan on January 29, 2011 at 12:13 PM

Is Obama/Bernanke/Geithner’s Policy of exporting inflation to “kick start” the U.S. economy the cause of the uprising in the Middle East? The people of the Middle East see food and energy rising and they cant survive any more. Now the Islamist will take advanatage of it and install a Theocratic Islamic Republic? This is our President’s policy? Is this dangerous when it comes to the national sercurity of America? He tells the Egyptian Gov. what to do with the issue of freedom and the people’s rights in Egypt, knowing that this action will put the Muslim Brotherhood in power and take control of the Gov.? And now please, someone tell me why he was silant when it came to the Irianian uprising. Was his silent because he did not want democratic reform in Irian? If so why? Please, some one tell me the answers.

casey92 on January 29, 2011 at 12:13 PM

IMF managers weren’t impressed with Obama’s SOTU speech? But they were totally agog with the Tuscon Memorial speech just like all the FNC analysts, I bet. My question is: are Obama and the Dems just stupid- literally, or are they desiring to take America, and by extension the world, down in flames as punishment rather than admit socialism doesn’t work? What do other readers here think?

JimP on January 29, 2011 at 12:20 PM

Why don’t the PRs, the Crrs , and the Sesquis join in on these discusssions? hmmmm. /

CWforFreedom on January 29, 2011 at 12:27 PM

WE borrow $ to lend $ & then get called out for our debt. It would be a good Monty python skit but unfortunately it’s for real.

I think we should pre emptively declare a jubilee. We all know it’s not going to end well the way things are. The 1st Country to renege and start over would be in the best position no?

America1st on January 29, 2011 at 12:35 PM

Wait.. we borrow from the IMF? and the IMF is warning the US to get our debt under control?

I thought we fund the IMF.

Skandia Recluse on January 29, 2011 at 10:48 AM

Given how Freddie Mac and Fannie Mae have worked for decades, I’m sure that when it comes to the IMF, we can do both.

gryphon202 on January 29, 2011 at 12:51 PM

This is the really big dogs speaking through their underlings, hey you jackasses are endangering our money now, knock it off!

Yours and my money, already flushed, we’re flushing seed now.

we’re at the point of no return, only the most emergency funding should be set aside, the rest gets the executioners axe and the seed money that’s waiting gets received with only the most loving moratorium on taxes and ultra business friendly environment imaginable. The seed has to sprout, period.

We’re there now folks, its not socialist play time anymore, there’s no debt fairy to come rescue us like we have for everyone else.

Speakup on January 29, 2011 at 12:55 PM

a task accomplished with around $7 billion from the US

Paid for with debt!

Stop spending now! No more money for external US interests.

Dandapani on January 29, 2011 at 1:11 PM

When Europe lectures us on entitlement cuts and reform, chances are we might actually be in trouble and should listen.

Koa on January 29, 2011 at 3:01 PM

WE borrow $ to lend $ & then get called out for our debt. It would be a good Monty python skit but unfortunately it’s for real.

Yes, it is the three-card monte (python) card game brought to you by ObaMao, Geithner, and Bernanke.

onlineanalyst on January 29, 2011 at 4:54 PM

OK who are those protesters in the pic?
I see the commie hammer & sickle on their banner.
Who are these people?

Badger40 on January 29, 2011 at 5:32 PM

Its over, we just dont know it. About the time some cuts actually kick in and nibble at the debt, the annual deficits and THEN, THEN interest rate rise will negate even massive draconian cuts……

sbark on January 29, 2011 at 6:51 PM

“Don’t be silly. Beijing will bail us out.”

AshleyTKing on January 29, 2011 at 7:13 PM

Why don’t the PRs, the Crrs , and the Sesquis join in on these discusssions? hmmmm. /

CWforFreedom on January 29, 2011 at
Because-Common sense, financial acumen, are way over trolls pay grade,trolls are paid with dogie treats thrown from the bridge.

Col.John Wm. Reed on January 29, 2011 at 8:34 PM

Yours and my money, already flushed, we’re flushing seed now.
The seed has to sprout, period.

We’re there now folks, its not socialist play time anymore, there’s no debt fairy to come rescue us like we have for everyone else.

Speakup on January 29, 2011
GOOD POINT.
The morons in bommas outfit would kill potted plants,no concept of agriculture at all. Milk come from bottles and cotton grows in the aspirin bottle,has to the seeds are white.

Col.John Wm. Reed on January 29, 2011 at 8:39 PM