Now would be a perfect time to lower the federal debt, Federal Reserve Chairman Jerome Powell opined Friday.
“It’s a fact that the United States is not on a sustainable fiscal path,” Powell said at a central banking conference in Stockholm, Sweden. “It’s serious problem and now is a great time to be working on it.”
The country’s low unemployment and overall economic strength make it an opportune time to lower the debt, Powell explained.
Powell hedged his comments by noting that the current level of national debt is not an immediate problem, and that the government still has the ability to cut taxes or boost emergency spending if it wants.
Nevertheless, the debt is a “problem that needs addressing urgently in the United States,” he said.
The federal debt held by the public has grown to 78 percent of the economy in recent years, and is forecast by government agencies to eclipse the size of gross domestic product in the next decade. There is a long-term mismatch between spending and taxes, driven in large part by the aging of the population driving up retirement benefits.
Nevertheless, Congress and President Trump have worked over the past year to accelerate the growth of the federal debt, rather than restraining it. Republicans and Trump enacted a $1.5 trillion tax cut, and then Democrats and Republicans worked together to increase government spending.
