A new International Monetary Fund(IMF) paper emphasizes how a fiscal stimulus can backfire if financial markets become worried about unsustainable debt. The IMF recommends "measures that are reversible or that have clear sunset clauses" and "pre-committing" to identified future corrective measures," such as letting the Bush upper-income tax cuts expire. It would be a matter of faith and clout of the lawmakers as I would envision in the days to come.
The above recommendation sound good but the action remains to be seen. The next several weeks will be a test, for the new Congress as much as for the new administration. The nation cannot afford a 111th Congress as gridlocked as the 110th.
On page A1: President-Elect Obama faces the twin challenges of managing the deficit, the annual gap between tax revenues and spending, and the swelling national debt, the amount of money that the government has borrowed to finance years of deficits.
Francis Shieh a.k.a. Xie Shihao,an observer for economics in action in USA with repercussions in Sino-American economics.
January 7, 2009 at 9.58 a.m.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment