Greenspan states the obvious… he’s a long way away from the position that these deficits are “manageable.”
Business > Greenspan Says Soaring Budget Deficits Are Long-Term Threat” href=”http://www.nytimes.com/aponline/business/AP-Greenspan.html?hp”>The New York Times > Business > Greenspan Says Soaring Budget Deficits Are Long-Term Threat
America’s soaring federal budget deficits represent a major obstacle to the country’s long-term economic stability, Federal Reserve Chairman Alan Greenspan warned on Thursday.
“Our fiscal prospects are, in my judgment, a significant obstacle to long-term stability because the budget deficit is not readily subject to correction by market forces that stabilize other imbalances,” he said in remarks to a banking conference.
Greenspan noted that the federal deficit, estimated to climb above $500 billion this year, will amount to 4.25 percent of the total economy after being in surplus just a few years ago.
He said one of the biggest concerns was that the deficits now were occurring right before the first wave of baby boomers will begin retiring.
“We have legislated commitments to our senior citizens that, given the inevitable retirement of our huge baby-boom generation, will create significant fiscal challenges in the years ahead,” Greenspan said in his remarks, which were delivered by satellite to the conference in Chicago.
Greenspan cautioned that the country should not be lulled into a false sense of security about the federal deficit just because at the moment interest rates on long-term Treasury securities remain at low levels.