The International Monetary Fund issued a warning on Thursday that the comprehensive U.S. tax and spending package facing congressional approval violates long-term fiscal responsibility principles. According to IMF spokesperson Julie Kozack the proposed legislation will increase the fiscal deficit and make debt stabilization more difficult.
Kozack stated in a briefing that experts agree the bill will increase U.S. deficits. The IMF believes that the United States must start reducing its fiscal deficit to achieve sustainable public debt reduction.
The Republican-backed measure faces opposition because its tax reductions and increased spending could harm fiscal restraint efforts. The IMF had previously suggested that the United States should adopt a gradual fiscal consolidation plan but this recommendation was ignored.
Kozack emphasized that starting deficit reduction early would enable a smoother transition and prevent the need for sudden spending cuts in the future. The IMF’s statements match the warnings from economists and credit agencies about the increasing difference between U.S. fiscal policy and debt management practices.
The rising national debt levels have made fiscal discipline a matter of growing importance. The bill faces likely passage but its future economic and investor confidence implications continue to spark new discussions within Washington and across the globe.
