2004-1-15
This is Bob Doughty with the VOA Special English Economics
Report.
A new report warns that the rising United States budget deficit
and trade imbalance threaten world economic security and growth. The
International Monetary Fund released the report last week. The Bush
administration says tax cuts have helped economic recovery, and
deficit cuts are planned.
Charles Collyns was among several I-M-F officials who researched
and wrote the report. Mister Collyns notes that the federal
financial balance has changed in the last few years. He says the
two-thousand budget year had a surplus of two-and-one-half percent
of the gross domestic product. That is the total value of goods and
services produced in the country. But in fiscal year
two-thousand-three the budget had a deficit of almost four percent
of the gross domestic product.
Mister Collyns says additional spending gave immediate and much
needed support to the American economy. But he says there are
long-term problems if large federal deficits continue. The I-M-F
team says budget estimates show large deficits for the next ten
fiscal years.
The report says these deficits would lead the United States to
borrow more money. It says foreign debt could equal forty percent of
the economy in a few years. This would be a record level for a large
industrial nation.
The I-M-F says growing debt and increased borrowing may force
international loan rates to rise. It says this would restrain
private investment, especially in the purchase of government bonds.
Mister Collyns says this process is already happening. He says it is
partly to blame for the fall in the value of the American dollar
during the last year.
The I-M-F experts say the result in the end is lower worldwide
productivity and earnings growth. The report says the American
government must raise taxes and limit spending to avoid this.
Administration officials noted that President Bush has already
said he will work to reduce the deficit by half during the next five
years.
Mister Bush spoke about the economy in his weekly radio message
last Saturday. He said business investment has increased and the
unemployment rate is falling. He said American stock market wealth
increased in the past year. And he again called on Congress to make
his tax cuts for Americans permanent.
This VOA Special English Economics Report was written by Caty
Weaver. This is Bob Doughty.