Federal Reserve Board Chairwoman Janet Yellen said Wednesday that she is “very worried” about the size and growth of the U.S. national debt, particularly given how federal spending on entitlement programs is likely to grow as Americans age.
“I am very worried about the sustainability of the U.S. debt trajectory,” Yellen said at a Joint Economic Committee hearing Wednesday.
“Our current debt-to-GDP ratio of about 75 percent is not frightening, but it’s also not low,” she said. “But when you look at, for example, CBO’s long-term budget projections, it’s the type of thing that should keep people awake at night.”
“It shows a picture in which, as our population ages, expenditures on Medicare, Medicaid, and Social Security grow more rapidly than tax revenues, and the debt-to-GDP ratio moves up,” she said. “This should be a very significant concern.”
Her warning on the debt is likely her last before she leaves her post. Yellen has said she would retire from the Fed once President Trump’s nominee, Jerome Powell, is confirmed.
The national debt nearly doubled under former President Barack Obama, to $19.84 trillion. In September, Trump signed legislation suspending the debt ceiling until early 2018, which allowed the government to continue borrowing money again.
It since rose more than $600 billion in two months, and is now approaching $20.6 trillion.
Yellen’s made her remarks after being asked by Rep. Don Beyer, D-Va., about consideration by Republicans of language in a tax cut bill that would restore taxes if the deficit grows too much. The tax cuts being considered by the GOP are expected to increase the deficit by about $1.5 trillion over the next decade, and the GOP has not suggested spending cuts in the bill to offset that revenue loss.
