Greenspan: Bush Budget Deficits Pose Danger
On the same day that Federal Reserve Chairman Alan Greenspan issued a fresh warning about the dangers of bloated budget deficits, Congress considered new tax breaks for the energy industry and an $81 billion measure to pay for U.S. military operations in Iraq and Afghanistan. The events Thursday illustrated the challenges — "hard choices," as Greenspan put it — that policy-makers face in trying to control spending. Greenspan, who steadily has pressed lawmakers, told the Senate Budget Committee that unless the situation is reversed, the economy in the years ahead could "stagnate or worse." Meanwhile, the House neared passage of legislation that would give billions of dollars in benefits to energy industries. The Senate prepared to vote on an $81 billion measure for war costs in Iraq and Afghanistan. Greenspan's plea for fiscal fitness coincides with the deterioration of the government's balance sheets. In 2000, the government posted a record budget surplus. Four years later, there was a record deficit, $412 billion. The deficit this year is projected to come in at $427 billion. Even with plans to control deficits by restricting domestic spending, President Bush and Congress project that deficits over the next five years will exceed $200 billion annually. [more]