Federal Reserve Chairman Jerome Powell said Wednesday that reducing the federal debt needs to return to the forefront of the agenda, warning that the government’s finances are unsustainable.
“I do think that deficits matter and do think it’s not really controversial to say our debt can’t grow faster than our economy indefinitely — and that’s what it’s doing right now,” Powell said at a press conference following the central bank’s monetary policy decision. “I’d like to see a greater focus on that over time.”
Deficit reduction has fallen from the agenda of Congress and the White House in the Trump era, even as the federal debt held by the public has risen to near $16 trillion and deficits have crept upward back to the $1 trillion level. Trump and Congress have cut taxes and increased spending.
More recently, too, Rep. Alexandria Ocasio-Cortez, D-N.Y., and other liberal members of Congress have embraced an economic theory that larger deficits are not bad, even during an economic expansion.
Powell, though, said that rising deficits and mounting debt would become a problem eventually, although he declined to predict when.
“But it is something that it’s important that the public discussion really come back to, if I can say that,” he said. “We will have to deal with it eventually.”
