IMF chief: U.S. needs to balance spending cuts, revenue increases in fiscal approach
WASHINGTON — The United States needs a balanced, comprehensive approach to tackle its fiscal woes that should include a mix of spending cuts and revenue increases, the head of the International Monetary Fund said on Sunday.
“My view, personally, is that the best way to go forward is to have a balanced approach that takes into account both increasing the revenue, which means, you know, either raising taxes or creating new sources of revenue, and cutting spending,” IMF Managing Director Christine Lagarde said on CNN's “State of the Union.”
Lagarde discussed her views about Washington's impending fiscal cliff, a combination of automatic spending cuts and tax increases that will simultaneously take effect in early 2013 if lawmakers cannot arrive at a deal.
President Obama's administration and congressional leaders are still trying to negotiate a way to avoid the cliff of $600 billion in tax increases and federal spending. Failure to do so could likely tip the economy back into a recession.
Lagarde cited the fiscal cliff as the biggest threat to the economy, saying America is more vulnerable to its own domestic troubles than to anything else happening in the Eurozone or China.
She told CNN she remains optimistic that lawmakers will come up with a plan before the fiscal cliff deadline.