Ben Bernanke, chairman of the Federal Reserve, made a public warning of government debt, saying that it’s time to start reining in the federal government’s deficit spending before long-term interest rates spike.
Bernanke told the House Banking Committee Wednesday that investor confidence may eventually be affected if the government does not decrease its debt. As a product of the economic stimulus package, the banking rescue package, assistance to the auto industry and other major spending measures, the White House projects the federal deficit for 2009 to be $1.8 trillion, which is unprecedented in U.S. history. The recent increase in government spending, combined with decreased tax revenues resulting from the recession, have caused the major shortfall.
Bernanke has maintained that the government’s intervention into the economy was “necessary and appropriate,” but now he says they must look to start operating in a surplus and paying down the debt.
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Source:
USA Today: Bernanke Warns on Deficits as Interest Rates Rise
