U.S. Federal Reserve Chair Jerome Powell on Wednesday voiced concern about the rise in national debt, which already surpassed 23 trillion U.S. dollars.
"It's very hard to say at what level you get concerned. I would say, be concerned now," Powell told lawmakers before the Senate Banking Committee.
"What we need to do is have the debt grow slower than the economy is growing," he said, warning that the interest costs could become a bigger burden in the future with current debt to gross domestic product (GDP) rising quickly.
"What it means is that 20 years from now... our children will be spending those tax dollars on servicing the debt rather than on the things that they really need," he said.
As U.S. debt accumulates and interest rates increase, net interest costs, which already average 1 billion dollars per day, are projected to increase from 382 billion dollars in 2020 to 819 billion dollars in 2030, according to a recent analysis released by the non-profit Peter G. Peterson Foundation.
At a hearing before the House Financial Services Committee on Tuesday, Powell had called on Congress to reduce the federal budget deficit, which is expected to exceed 1 trillion dollars this year.
"Putting the federal budget on a sustainable path when the economy is strong would help ensure that policymakers have the space to use fiscal policy to assist in stabilizing the economy during a downturn," he said.
Powell's remarks came after the White House on Monday unveiled a budget proposal that would balance its spending in 15 years but relied on overly optimistic economic projections for growth.
"The budget relies heavily on inflated economic growth assumptions, unrealistic policy savings, and other gimmicks to paper over its failure to sufficiently reduce the nation's structural deficits and counteract the trillions of debt the President has signed into law," the Committee for a Responsible Federal Budget (CRFB), a nonpartisan watchdog group, wrote Monday in an analysis.
"The reality is that in order to manage our rapidly growing debt, we need to address the big issues -- the aging of our population, rising healthcare costs and inadequate revenues," said Michael A. Peterson, CEO of the Peter G. Peterson Foundation.
