Tags: Greenspan: | U.S. | 'Lost | Control' | Deficit

Greenspan: U.S. 'Lost Control' of Deficit

Tuesday, 27 September 2005 12:00 AM

France's Finance Minister revealed Saturday that Federal Reserve Chairman Alan Greenspan says the U.S. has "lost control" of its budget deficit.

Finance Minister Thierry Breton quoted Greenspan expressing exasperation at U.S efforts to curb its growing budgetary red ink.

"'We have lost control,' that was his expression," Finance Minister Thierry Breton was quoted telling the press after a face-to-face meeting with Greenspan.

"The United States has lost control of their budget at a time when racking up deficits has been authorized without any control (from Congress)," Breton said.

The remarks suggest Greenspan may have serious worries about the U.S. economy and will continue a maverick course at the Fed until his scheduled departure on January 31.

Recently Greenspan told Congress that the U.S. economy "has regained some traction."

But in his last Federal Reserve meeting he ratcheted up interest rates to 3.75 points, despite the fact that some in Congress and the administration urged him to not raise rates.

But Greenspan was apparently unfazed by such arguments, and raised rates for the eleventh time since June of 2004.

Breton suggested Greenspan will continue to raise rates.

"One has the feeling – though he didn't say so – that interest rates will probably continue to rise slightly until his departure."

Before Katrina hit the U.S., federal estimates placed the deficit at more than $330 billion.

But economists see that figure rising by perhaps another $100 billion or more as the Bush administration seeks to rebuild the Gulf Coast after the nation's most costly natural disaster ever.

Greenspan and other foreign finance ministers are apparently more worried about the growing deficit then the potential of an economic recession.

Breton also claimed Greenspan shared his view the Bush administration was not taking the deficit seriously.

"We were both disappointed that the management of debt is not a political priority today," he said.

Ministers from the Group of Seven nations Friday called for international efforts to reduce trade and other imbalances.

U.S. Treasury Secretary John Snow told the G7 the U.S. was still on course to cut its budget deficit by fifty percent in the next four years.

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France's Finance Minister revealed Saturday that Federal Reserve Chairman Alan Greenspan says the U.S. has "lost control" of its budget deficit. Finance Minister Thierry Breton quoted Greenspan expressing exasperation at U.S efforts to curb its growing budgetary red ink....
Greenspan:,U.S.,'Lost,Control',Deficit
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2005-00-27
Tuesday, 27 September 2005 12:00 AM
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