Deficits...schmefasitz...

U.S. Fiscal Credibility in Question as Deficits Press
Tue Dec 7, 2004 11:38 PM ET
By Glenn Somerville

WASHINGTON (Reuters) - Global financial markets and world policy-makers are demanding the Bush administration produce a convincing plan to curb record deficits in its second term lest the U.S. dollar face further punishment.

The dollar scraped new lows against the euro on Tuesday, amplifying calls from Europe for the United States to reduce massive shortfalls in its budget and current account, the broadest measure of trade.

U.S. officials stoutly maintain the solution to world trade imbalances is a shared one -- with faster growth in Europe and more U.S. savings.

But economists say that despite a public vow to cut deficits, the budget situation is unlikely to improve dramatically, particularly with White House commitments to costly Social Security and tax reform.