The IMF Urges U.S. to Take Quick Action

The IMF Urges U.S. to Take Quick Action

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In a three-day meeting focused on the risks that the U.S. economy could face if Congress and the Obama administration fail to reach a deal to reduce the country’s deficit, world leaders warned that hitting the “fiscal cliff” would reduce growth and eliminate jobs at a time when the economy is struggling to recover. The New York Times’ Martin Fackler reports that the International Monetary Fund warned that quick action was needed to “break negative feedback loops and restore the global economy to a path of strong, sustainable and balanced growth.”

Added Fackler, “The scale of America’s fiscal problems was underscored just hours before the meeting in Tokyo, when the Obama administration announced that the budget deficit this year would reach$1.1 trillion, exceeding $1 trillion for a fourth straight year. While that is down from last year, United States deficits had never topped half a trillion dollars before the 2008 financial crisis.” - Read more at The New York Times

While Wall Street executives assemble “fiscal cliff war rooms” and urge Congress to reach a deal before massive spending cuts and tax hikes take effect, the average American doesn’t seem to be showing much concern about the potential economic meltdown on the horizon. Consumer confidence actually surged in October to its highest level since before the recession.

In a survey of consumers by RBC Capital Markets, only 14 percent of consumers said they’d changed their spending or investing behavior because of the fiscal cliff.
“For all the attention the fiscal cliff is getting in Washington and on Wall Street, most consumers just aren’t paying attention,” said Tom Porcelli, RBC’s chief U.S. economist. - Read more at The Wall Street Journal

While the country racks up the fourth largest deficit since World War II, Obama administration officials said they have it together and it’s Congress’s turn to make a move. Treasury Secretary Timothy F. Geithner told Congress on Friday that the administration has put forward a “balanced” proposal to reduce the country’s deficit, and that now, “It is time for Congress to act on these necessary steps that will help create sustainable economic growth for years to come,” Bloomberg’s Meera Louis and Ian Katz report. - Read more at Bloomberg

While the sequester may be avoided if Congress reaches a deal or at least kicks the can down the road to delay cuts that could send a devastating blow to the Pentagon, defense officials are still expecting major cuts regardless of what Congress does (or does not do) during the lame duck session. Reuters’ Peter Apps reports that defense firms have already begun laying off staff and closing facilities and that few believe military cuts will be avoided in the next few years, regardless of the outcome of the November election. - Read more at Reuters 

Director of National Intelligence James Clapper calls the automatic cuts set to slam both the defense and civilian community on the first of next year “disastrous” for the intelligence community. Clapper told CNN’s Pam Benson last week that every major program is in jeopardy of being wounded. The cuts would be 10 percent and would impact both programs and personnel. - Read more at CNN 

Concerned about the major hit to the defense budget, James Koutz, national commander of the American Legion, writes in New Jersey Today that “elected officials are officially on notice.” The defense budget is bracing to be hit with half a trillion dollars’ worth of cuts at the beginning of next year if Congress and the administration fail to reach a deficit reduction deal. “While there is plenty of blame to go around as to who caused the current deficit crisis, it is certain that it is not the soldier or the veteran that created this mess. And it should not be our men and women in uniform who must pay the price. We call on all Americans to put our elected leaders on notice: Fix it now.” -Read more at New Jersey Today

For more news on the approaching fiscal cliff, follow us on Twitter @Fiscalcliffnote.

Brianna Ehley is the former Washington Correspondent for The Fiscal Times. She is currently a reporter on Politico's health care team in Washington, D.C.