IMF pushes Bush on deficit goals

WASHINGTON — The International Monetary Fund on Wednesday urged the Bush administration to set a more ambitious goal of eliminating the federal budget deficit over the next five years and said tax increases may be needed to accomplish that objective.

The IMF proposal was included in the agency’s annual review of the U.S. economy. It is a suggestion the agency has made before and one the administration has rejected, preferring to stick with President Bush’s pledge that he will cut the deficit in half by the year he leaves office in 2009.

The IMF review, however, said this goal was not sufficiently ambitious, given the challenges the United States faces in dealing with the health care and pension costs that the government will face with the looming retirement of 78 million baby boomers.

Instead of just aiming to cut the deficit in half, the IMF said the administration should be seeking to bring the budget into balance, excluding the income received by Social Security.

That would be a significantly harder job since the government is using around $200 billion in surplus Social Security revenues being collected annually to fund other government programs and lower the budget deficit.

“With revenues continuing to be buoyant, we would again propose a target of balancing the budget excluding the Social Security surplus over the next five years,” the IMF wrote.