By Ian McKendry
WASHINGTON (MNI) – The ongoing fiscal debate in the United States
is not only a risk to its economy but could also derail the global
recovery, IMF Managing Director Christine Lagarde said Friday.
“[The] United States faces this very difficult situation,” Lagarde
said during a seminar on ‘A Narrow Path for the Global Economy’ hosted
by the IMF.
She said it could be a “very disturbing moment” when U.S. tax cuts
expire and spending is cut-off automatically, all with the backdrop of
the debt ceiling debate.
Christina Romer, the former chair of President Barack Obama’s the
Council of Economic added to Lagarde’s comments, saying “that fiscal
cliff is a very big problem” and that it would be “devastating to the
U.S. economy if we went over that cliff.”
Thursday, during a press conference ahead of the IMF spring
meeting, Lagarde had said “the global economy has entered a timid
recovery but still faces high risks, with some dark clouds on the
horizon.”
Friday, Lagarde said the U.S. fiscal debate was one of the dark
clouds she was referring to, along with rising oil prices and the
European debt crisis.
Romer said the U.S. economy is “stable” and progress has been “much
better” than Europe but that growth has not been strong enough to bring
down unemployment.
** MNI Washington Bureau: 202-371-2121 **
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