By Kevin Bogardus - 12/09/12 05:51 PM EST
Christine Lagarde, managing director of the International Monetary Fund, said on Sunday that the United States risks a severe economic downturn if lawmakers can’t avoid going over the “fiscal cliff” next year.
Speaking on CNN’s “State of the Union,” the former French finance minister warned of the dangers from the set of massive tax increases and budget cuts that will go into effect next year if Congress doesn’t act. Lagarde said without a deal in place, the U.S. economy could experience zero growth next year.
Lagarde also said the fiscal cliff is a bigger threat to U.S. economic security than the debt crises in Greece and other European countries.
“I think the U.S. economy, because it's a relatively closed economy, because it is large, because it trades with itself and with its immediate neighbors, is less vulnerable to what happens outside, for instance in Europe,” Lagarde said. “I'm not saying that there will no consequences out of a crisis that could happen in Europe. But the consequences would be relatively minor.”