WASHINGTON (Pakistan Point News / Sputnik - 14th November, 2019) The US budget is on an unsustainable path with its record - and raising - debt levels, Federal Reserve Chairman Jerome Powell said in a congressional testimony.
"The federal budget is on an unsustainable path, with high and rising debt," Powell told the Joint Economic Committee on Wednesday. "Over time, this outlook could restrain fiscal policymakers' willingness or ability to support economic activity during a downturn."
The Treasury Department announced last week that the US government's outstanding public debt has surpassed $23 trillion for the first time in history.
Powell said he remains concerned that the rising debt can restrain private investment and reduce productivity and overall economic growth.
"Putting the federal budget on a sustainable path would aid the long-term vigor of the US economy and help ensure that policymakers have the space to use fiscal policy to assist in stabilizing the economy if it weakens," Powell said.
Powell also said the Federal Reserve was continually monitoring risks to the financial system and over the past year noted that the overall level of vulnerabilities has remained moderate.
"Overall, investor appetite for risk appears to be within a normal range, although it is elevated in some asset classes," Powell said. "Debt loads of businesses are historically high, but the ratio of household borrowing to income is low relative to its pre-crisis level and has been gradually declining in recent years. The core of the financial sector appears resilient, with leverage low and funding risk limited relative to the levels of recent decades."
Brian Riedl, senior fellow at the Manhattan Institute, told Sputnik in an interview last week that it was impossible to close the long-term US budget deficit without cuts to Social Security and Medicare, Social Security and health insurance programs.
