Federal Reserve Chairman Jerome Powell on Tuesday said the U.S. is going to face a long-term reckoning on an ever-increasing national debt, even as an infusion of federal spending is giving the economy a short-term boost during the coronavirus pandemic.
“The United States federal budget has been on an unsustainable path for years now,” he told members of the Senate Banking Committee. “Over time, future generations — our kids and our grandkids — their tax dollars will be going to servicing the debt that we incurred to buy the stuff we wanted when we were in charge.
“Every generation is entitled to spend what it wants to spend on the things it thinks it needs, but it really ought to pay for them in some sense rather than passing the bills onto [their] kids,” Mr. Powell said.
He said the U.S. has a lot of borrowing capacity, but “we need to get back on a sustainable path.”
He said the time to work on that is when the economy is strong and unemployment is low.
Those conditions were in place prior to the pandemic. But Democrats and Republicans on Capitol Hill have generally come together in recent years to boost federal spending and work around fiscal guardrails that a tea party-infused Congress helped pass after the 2010 GOP wave.
“Those concerns are always going to be there, but I wouldn’t worry about them at a time like this,” Mr. Powell said. “The spending — what it’s doing is it’s giving us a better economy going forward, which will probably help service the debt.”
Congress has authorized roughly $3 trillion in spending in recent months to respond to the coronavirus pandemic.
The Treasury Department reported this month that the coronavirus-related spending helped drive a record $1.88 trillion deficit for the first eight months of the current fiscal year.
The U.S. national debt also recently passed the $26 trillion mark.
• David Sherfinski can be reached at dsherfinski@washingtontimes.com.
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