World Bank economist urges end to US fiscal fights

WASHINGTON, United States – The World Bank’s chief economist called on the US to end a series of political budget battles by undertaking structural economic reforms.

“It is time now for the US to move on from fighting each fiscal fire successively,” Kaushik Basu said in a conference call on the bank’s latest economic report.

The US should step up efforts “to discover nonflammable material, that is making structural reforms, so that these flashpoint don’t occur with as much regularity,” he added.

After avoiding the worst of the tax measures enshrined in the year-end fiscal cliff, the US is now grappling with the debt ceiling crisis, with Republican lawmakers tying an increase in the nation’s legal borrowing limit to deficit-reduction negotiations.

President Barack Obama refused to negotiate the debt ceiling and warned Republicans not to use the issue as a bargaining chip.

The Treasury announced on December 31 it would take extraordinary measures to keep the government’s debt below the current $16.4 trillion limit. Without an agreement in Congress to raise the limit, the US could default on its debt.

A similar showdown occurred in mid-2011, leading rating firm Standard & Poor’s to cut its prized “AAA” rating on the US. – Agence France-Presse