Tags: US | big | test | Geithner

US Faces 'Big Test' on Tax, Budget Decisions at Year's End, Geithner Warns

Wednesday, 18 Apr 2012 09:57 AM

 

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The U.S. government will face a major test on whether it has the capacity to govern when it faces big tax and budget decisions at the end of the year, U.S. Treasury Secretary Timothy Geithner said on Wednesday.

Before 2013, the United States will be forced to deal with the expiration of tax cuts that affect nearly all U.S. taxpayers, automatic budget cuts, as well as another debate over raising the country's debt limit.

"It will be a big test in Washington, a big test of the country to govern itself in how Washington deals with those challenges," Geithner said ahead of a meeting on Friday of finance ministers from the Group of 20, representing the world's leading industrialized and emerging market economies.

Editor's Note: You Deserve to Know What Obama and Bernanke Are Hiding From Americans

A protracted fight over how to rein in the country's trillion dollar plus deficits and raise the U.S. debt limit in 2011 forced the government to the brink of several shutdowns and stripped the United States of its top credit rating.

The U.S. Treasury expects the country to hit the debt ceiling or the legal limit it is allowed to borrow before the end of the year and individual tax cuts enacted under former President George W. Bush — known as the Bush tax cuts — will expire Dec. 31.

As well, $1.2 trillion in automatic budget cuts are set to kick in early January, which will force the Obama administration and Congress to deal with the country's fiscal problems.

"Hopefully we use it as an opportunity to make another significant step towards long term fiscal reform at that time," Geithner said.

Meanwhile, Geithner said the International Monetary Fund was in a position to raise a substantial amount of capital quickly but that it should not substitute for a forceful response by Europe to its debt crisis.

"The IMF is in a very good position ... to demonstrate to the world that ... it has the ability to raise additional finance from other countries very, very quickly if it needs to do that," Geithner said.

"I think that's good because that will prove to the world that there's a substantial capacity that can reinforce what Europeans are doing and help cushion, if necessary, the effects of any European trauma on the rest of the world."

"What we did not want to see is people look to the IMF as a way to substitute for a more forceful European response," he said.

Editor's Note: You Deserve to Know What Obama and Bernanke Are Hiding From Americans

 

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