Fed chief: Budget deficits raise risks to economy | VailDaily.com

Fed chief: Budget deficits raise risks to economy

WASHINGTON – The persistence of big budget deficits raises risks to the country’s long-term economic health and need to be curbed, says Federal Reserve Chairman Ben Bernanke.”The prospective increase in the budget deficit will place at risk future living standards of our country,” Bernanke said. “As a result, I think it would be very desirable to take concrete steps to lower the prospective path of the deficit.”Bernanke’s comments on the budget deficit were contained in a written response to questions raised by Sen. Robert Menendez, D-N.J., after the Fed’s chief appearance at a congressional hearing on the economy in February.Last year’s budget deficit came to $319 billion, an improvement from 2004 but still the third largest deficit ever recorded. This year, the White House is projecting the deficit to swell to $423 billion, which would set a record in dollar terms.The budget will come under “severe pressure” when baby boomers start retiring and collecting Social Security and Medicare benefits, Bernanke said. Against that backdrop, “I am quite concerned about the intermediate to long-term federal budget outlook,” he wrote.The Fed chief’s written response was dated March 9 and released to The Associated Press on Tuesday.Vail, Colorado

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