Unchastened by recent difficulties, Christine Lagarde & co. see a smaller-than-expected deficit, rising tax revenues and other signs of a terminally-ill economy and insist they know the solution (this time).
The International Monetary Fund urged the United States on Friday to repeal sweeping government spending cuts and recommended that the Federal Reserve continue a bond-buying program through at least the end of the year.
In its annual check of the health of the U.S. economy, the IMF forecast economic growth would be a sluggish 1.9 percent this year. The IMF estimates growth would be as much as 1.75 percentage points higher if not for a rush to cut the government's budget deficit.
The IMF cut its outlook for economic growth in 2014 to 2.7 percent, below its 3 percent forecast published in April. The Fund said in April it still assumed the deep government spending cuts would be repealed, but it had now dropped that assumption….
"The deficit reduction in 2013 has been excessively rapid and ill-designed," the IMF said. "These cuts should be replaced with a back-loaded mix of entitlement savings and new revenues…."
"Now our advice is not just to slow down (budget cuts)," IMF Managing Director Christine Lagarde said at a news conference. "Our advice is also to hurry up: hurry up with putting in place a medium-term road map to restore long-run fiscal sustainability."