Finance chiefs of the world's 20 leading economies are ringing alarm
bells over the U.S. fiscal cliff and Europe's debt woes at a meeting in
Mexico this weekend as they look to push back deficit reduction targets
to help boost growth.
Unless a fractious U.S. Congress can reach a deal, about $600 billion in government spending cuts and higher taxes are set to kick in on January 1, threatening to push the American economy back into recession and hit world growth.
Unless a fractious U.S. Congress can reach a deal, about $600 billion in government spending cuts and higher taxes are set to kick in on January 1, threatening to push the American economy back into recession and hit world growth.
But with the U.S. presidential election looming on Tuesday, dealing with the fiscal cliff has been delayed.
"The
Americans themselves acknowledge that this is a problem," a G20
official said on condition of anonymity. "The U.S. administration says
it doesn't want to fall off the fiscal cliff, but right now it can't
tell us how exactly it will address it because that issue is on ice
ahead of the election."
Tax
cuts enacted under President George W. Bush are set to expire in
January, when automatic spending cuts designed to put pressure on
lawmakers to strike a long-term budget deal are also set to kick in.
"What
remains a sort of key aspect is that the United States is not
respecting the current commitments (to reduce its deficits) and does not
have a credible fiscal consolidation plan," one European official said.
The U.S. Congress will also soon have to raise the nation's debt limit to avoid a default.
Read more: http://www.cnbc.com/id/49682167
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