Weighed down by trillions of dollars in national debt, the United States is on course to barrel off a financial cliff if the government does not immediately hit the brakes and dial back spending, according to the head of the Federal Reserve.
“In the long run, the United States is on an unsustainable fiscal path,” warned Fed Chair Jerome Powell in an interview with 60 Minutes on Sunday.
“That just means that the debt is growing faster than the economy. So, it is unsustainable,” Powell explained.
“I don’t think that’s at all controversial,” he added.
If the U.S. government fails to handle spending, Powell said, the national debt is projected to rise from $34.15 trillion to about $144 trillion over the next 30 years, marking a more than $100 million increase by 2054.
Despite the clear economic dangers concerning the U.S. national debt, Powell says it’s not the Federal Reserve’s job to judge fiscal policy.
While the Fed is responsible for monetary policy (interest rates and money supply), the federal government oversees fiscal policy (taxes, spending, and regulation).
Since Congress has oversight of the U.S. Central Bank, monetary policymakers try “very hard not to comment on fiscal policy” or “instruct Congress on how to do their job,” said Powell.
Therefore, “the national debt doesn’t play a big role in our thinking — doesn’t play any role, actually, in our thinking,” he said.
Although the Fed makes no decisions regarding fiscal policy, Powell said it’s vital that the U.S. “get back on a sustainable fiscal path.”
“I think we know that we have to get back on a sustainable fiscal path. And I think you’re starting to hear now from people in the elected branches who can make that happen,” said Powell during Sunday’s interview. “It’s time that we got back to that focus.”
As chair of the Federal Reserve, Powell said he would like to see adult conversation among elected officials concerning the best avenues for getting the federal government back on track.
“You know, we’re effectively borrowing from future generations,” he said.
Every generation should pay for the things that it needs and not simply pass down that debt to our children and grandchildren, Powell said. Otherwise, the U.S. is only making it harder on future generations, he explained.
