In remarks to the Peterson Institute for International Economics on Tuesday, head of the International Monetary Fund, Christine Lagarde, voiced her concern over the January 1, 2013 Taxmageddon. Lagarde warned of the devastating affect Taxmageddon would have on the U.S. economy if not dealt with. According to Lagarde, Taxmageddon would result in a 2 percentage point decline in GDP that would in essence eliminate any expected growth in the U.S. for 2013.
Lagarde told those in attendance that action needed to be taken “to avoid the fiscal cliff.” Lagarde’s statement mirrored many economists and institutions, including the CBO and Federal Reserve.
In regard to the global repercussions of Taxmageddon uncertainty, Lagarde said, “This is true everywhere. But the current uncertainty presents a serious threat for the United States and, as the world's largest economy, for the global economy.”
Lagarde urged Congress to resolve uncertainty caused by Taxmageddon negotiations. In light of the imminent threat of a domestic and possible global recession, Lagarde said:
"So we all hope that, despite political calendars, which anywhere in the world entail a degree of uncertainty and unpredictability, there will soon be enough political clarity and no political games in order to actually focus on removing this uncertainty and making sure that both the issue of the fiscal cliff and the issue of the debt ceiling are addressed properly."