AMERICA’S public finances are “clearly unsustainble”, Ben Bernanke said yesterday – although the Federal Reserve chief advised the government against immediate strong cuts.
Referring to the need for fiscal consolidation, Bernanke told the House budget committee that “even more aggressive strategies than have been pursued recently are warranted over the longer term”.
Yet he warned that cuts must not “jolt the recovery” by coming in “all at once”, adding: “As long as there’s a credible, strong plan over time...and we move into that plan [then] we’ll achieve most of the objectives of fiscal sustainability”.
The US state has debts in excess of $15 trillion.
Bernanke also defended the US central bank’s policies against charges from Republican politicians that they risked sparking inflation, saying the economy still needs plenty of support.
