They've issued the most ludicrous statement, suggesting that the US cut its social security benefits to ease debt fears. I'm just flabbergasted that they would even broach the subject.
First, the IMF is essentially promoting the idea that the US Congress continue to borrow against the SS trust fund to pay for general budgetary expenditures. Instead of solvency issues in 2037, the SS trust fund will be facing solvency issues in 2017, when it is expected to go from building a cash surplus to drawing down from that surplus. If there is no actual cash left from being raided for general budgetary spending (reducing the debt), Congress will have to borrow to pay back that money.
Cutting benefits would thus have a limited effect, as interest rates would probably be much higher in 2017, than it is today, eating away any future debt reduction. At best, it's a shell game with a net-zero effect, except of course, to cut benefits of one class of people, which leads me to item two.
Second, they're suggesting that retired, disabled and surviving spouses should suffer cuts for spending largess such as Bush's wars and tax cuts. Hey, haven't we heard this one before? It's always the middle class and the poor who must suffer for the sins of the rich, huh?
And they wonder why we tax the rich at a higher rate?
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