“TOKYO (Reuters) – A polarized Washington that cannot find a way around the looming “fiscal cliff” is compounding economic uncertainty, freezing business investment and threatening growth, the IMF’s No. 2 official and its top-ranking American said on Monday.
In an interview with Reuters in Tokyo, IMF First Deputy Managing Director David Lipton said theUnited States needs to do more to show it is trying to address the expiring tax cuts and automatic spending reductions that will hit early next year unless Congress acts.
The looming fiscal tightening in the United States and the euro zone economic crisis are the two biggest risks facing the world economy, Lipton said. While most of the focus has been on Europe, Lipton stressed that the U.S. fiscal problems also posed a significant threat.
“We would like to see the United States lower the level of uncertainty by embracing more specifically the need to avoid the fiscal cliff and deal with the medium-term problems,” said Lipton, a former economic adviser to President Barack Obama.”
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