WASHINGTON -- Former Federal Reserve Chairman Alan Greenspan said in prepared testimony the threat to U.S. fiscal stability is larger than ever, mostly because of rising medical costs.
Averting a situation where the U.S. struggles to finance unprecedented budget deficits "is more urgent than at any time in our history," he said in testimony Thursday before the Senate Committee on Homeland Security and Governmental Affairs.
Mr. Greenspan argued that the problem of large projected shortfalls in Medicare and Medicaid can't be wiped away with more appropriations from Congress. "It is a physical resource crisis," he argued, which will suck more of the U.S. labor force and capital investment into the medical sector.
"A dollar of the nation's scarce savings employed to finance a new medical technology investment is a dollar not available to fund other critical, non-medical, cutting-edge technologies that enhance our material wellbeing," he said.
The hearing comes amid growing unease on Capitol Hill over the budget gap, which reached $1.4 trillion in fiscal year 2009. The House on Wednesday approved a short-term $290 billion extension in the debt limit, after leadership scrapped an earlier plan to approve a $1.8 trillion increase to support the government through 2010. The decision was made after the larger increase appeared unlikely to gain enough support in the Senate.
Sens. Kent Conrad (D., N.D.) and Judd Gregg (R., N.H.) testified before the panel about their legislation to establish a bipartisan task force comprised of members of Congress and the Treasury secretary. The task force would propose recommendations for reining in the deficit that would receive fast-track consideration in the House and Senate.
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