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Home >> Business
UPDATED: 08:11, March 15, 2006
Bernanke says big budget deficit raises risks to U.S. economy
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U.S. Federal Reserve Chairman Ben Bernanke has said that the persistence of big budget deficit raises risks to the nation's long-term economic health and need to be curbed.

"The prospective increase in the budget deficit will place at risk future living standards of our country," Bernanke said in his written response to questions raised by Sen. Robert Menendez, according to a report by the Associated Press on Tuesday.

"As a result, I think it would be very desirable to take concrete steps to lower the prospective path of the deficit," said Bernanke, who took over the helm of the central bank on Feb. 1 this year.

Menendez raised his questions after the Fed's chief appearance at a congressional hearing on the economy in February. Bernanke's written response was dated March 9.

The Fed chief said that the budget will come under "severe pressure" when baby boomers start retiring and collecting Social Security and Medicare benefits.

Against that backdrop, "I am quite concerned about the intermediate to long-term federal budget outlook," he said.

For all of last year, the budget deficit totaled 319 billion dollars, the third largest on record.

At present, the Bush administration forecast that the budget deficit for the current fiscal year, which ends Sept. 30, 2006, would reach 423 billion dollars, setting a new record. The old record of 413 billion dollars was set in 2004.

But the Congressional Budget Office has recently predicted that the U.S. budget deficit for the current fiscal year would total 371 billion dollars, up from its earlier estimate of 337 billion dollars but much less than the administration's forecast.

Source: Xinhua


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