Alfred E. Greenspun's Testimony
Excerpts:
The unified budget ran a deficit equal to about 3-1/2 percent of gross domestic product in fiscal 2004, and federal debt held by the public as a percent of GDP has risen noticeably since it bottomed out in 2001.
To be sure, the cyclical component of the deficit should narrow as the economic expansion proceeds and incomes rise...and the recent pace of the ramp-up in spending on defense and homeland security is not expected to continue indefinitely.
Our budget position is unlikely to improve substantially in the coming years unless major deficit-reducing actions are taken...the federal budget is on an unsustainable path, in which large deficits result in rising interest rates and ever-growing interest payments that augment deficits in future years.
But most important, deficits as a percentage of GDP in these simulations rise without limit. Unless that trend is reversed, at some point these deficits would cause the economy to stagnate or worse.
Full Transcript
The unified budget ran a deficit equal to about 3-1/2 percent of gross domestic product in fiscal 2004, and federal debt held by the public as a percent of GDP has risen noticeably since it bottomed out in 2001.
To be sure, the cyclical component of the deficit should narrow as the economic expansion proceeds and incomes rise...and the recent pace of the ramp-up in spending on defense and homeland security is not expected to continue indefinitely.
Our budget position is unlikely to improve substantially in the coming years unless major deficit-reducing actions are taken...the federal budget is on an unsustainable path, in which large deficits result in rising interest rates and ever-growing interest payments that augment deficits in future years.
But most important, deficits as a percentage of GDP in these simulations rise without limit. Unless that trend is reversed, at some point these deficits would cause the economy to stagnate or worse.
Full Transcript
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