The Trump administration has paid its price for its failure to start its economic stimulus. Forecasts made by International Monetary Fund or IMF-as it is popularly known- was toned down by the organization itself in its yearly check-up of the world's biggest economy. The IMF, a worldwide lender of last resort announced its intention of dropping its earlier assumption of higher infrastructure spending and tax cuts will give a push to growth. The reason given is that those plans continue to evolve.
Middle and low-income earners hardest hit
It was also suggested by the IMF that the absence of economic activity will hit middle income and low-income earners the most when compared to their more prosperous or poorer counterparts. These two economic strata will be hit by the government spending cuts in the latest budget plans of the administration. The earlier forecast made by the organization envisioned US economic growth to be at 2.3 percent. It has since downgraded this forecast to 2.1 percent. The earlier forecast was made in April. Doubts were cast too on whether this investment package will achieve the stated aim of an above three percent rate of growth for the American economy.
The IMF, in its report, said that such a dramatic improvement in economic performance was not likely. It pointed out that jobless rate was at low level-totally consistent with a complete employment scenario. At one time, the fund asked for a more balanced welfare cut. Instead, a proposal for a draft budget was given. The White House is all set to highlight its economic agenda post political battles over security and health. President Trump wants a whopping one trillion dollars overhaul of the American ageing transport system. This was partly being paid via a few tax breaks. Trump argues that such an approach holds back the growth of the economy.
President Trump is also moving to buttress lending by banks through cutting the red tape that are imposed on banking industry. This red tape was imposed by the earlier Obama administration so that the sector remains free from risky activity. President Trump had pledged to eradicate the Dodd-Frank rule. He said that such laws were responsible for the doldrums present in the United States economy. The rule refers to the broad measures which were put in place by the US Government to prevent another financial crisis. The Dodd-Frank rules were supported by the IMF as well. The organization has sounded a warning on trading too.