Greenspan Warns Congress To Get A Hold on the Budget

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Fed Chairman Alan Greenspan warned Congress to get the budget under control or the economy could be in serious trouble either stagnating or worse.

He said the while the economy is doing well, it handle the strain of the deficit with interest rates on the rise.

Greenspan told the Senate Budget Committee, “Under existing tax rates and reasonable assumptions about other spending … projections make clear that the federal budget is on an unsustainable path, in which large deficits result in rising interest rates and ever-growing interest payments that augment deficits in future years.”

Greenspan has given warnings about this topic before.

“As the latest projections from the (Bush) administration and the Congressional Budget Office suggest, our budget position is unlikely to improve substantially in the coming years unless major deficit-reducing actions are taken,” the Fed chief said.

Greenspan went on to say that fixing the budget would be painful considering the number of aging baby boomers that will enter the retirement community and the social security rolls.

“In my judgment, the necessary choices will be especially difficult to implement without the restoration of a set of procedural restraints on the budget-making process,” he said.
“These uncertainties — especially our inability to identify the upper bound of future demands for medical care — counsel significant prudence in policy-making,” Greenspan said, adding that policy-makers “need to err on the side of prudence when considering new budget initiatives.”

John Stith is a staff writer for WebProNews covering technology and business.

Greenspan Warns Congress To Get A Hold on the Budget
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