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Tue Feb 11, 2020, 08:28 PM

Fed Chief Issues Stark Warning To Congress On Deficits



FINANCE
February 11, 2020 - 04:08 PM EST

BY SYLVAN LANE137
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Federal Reserve Chairman Jerome Powell called on Congress to reduce the U.S. federal budget deficit to ensure the central bank could adequately respond to a financial crisis or recession.

Powell told a House committee Tuesday that lawmakers should curb federal spending while the economy is running strong before a downturn forces Congress or the Fed to pump stimulus spending into the U.S.

“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,” Powell said Tuesday before the House Financial Services Committee.

“A more sustainable federal budget could also support the economy’s growth over the long term.”

Powell’s comments come one day after President Trump proposed a budget for fiscal 2021 with a $1 trillion deficit that puts the U.S. on track to balance its spending in 15 years. Those projections assume the economy growing at a far faster rate than predicted by most economists.

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https://thehill.com/policy/finance/482617-fed-chief-issues-stark-warning-to-congress-on-deficits

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