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US headed for "fiscal crisis," Bernanke warnsDPAJan. 19, 2007 |
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 Washington- The United States is headed for a fiscal crisis of historic proportions unless the government tackles the rising cost of social programmes for an ageing population, Federal Reserve chief Ben Bernanke warned Thursday. Spending obligations under current government pension and health-care benefits "will put enormous pressure on the federal budget in coming years," Bernanke told a US Senate hearing in Washington. The result may be "a vicious cycle" in which large budget deficits rapidly push up the national debt and interest payments, he said. "Ultimately, this expansion of debt would spark a fiscal crisis, which could be addressed only by very sharp spending cuts or tax increases, or both," Bernanke said. Economists at the US Congressional Budget Office calculated that under current conditions the federal debt - currently 37 per cent of US gross domestic product - would be as large as GDP by 2030 "and would continue to grow exponentially after that," he said. © 2006 - dpa German Press Agency |
