–Senate Budget Chair Conrad: Deficits Set To Fall, But Then Surge
–Sen. Conrad: ‘Imperative’ To Develop, Implement Plan To Cut Deficit
–Sen. Gregg: Current Fiscal Path Is ‘Not Sustainable’
–Sen. Gregg: Must Focus on Rapid Growth of Spending To Fix Deficits

By John Shaw

WASHINGTON (MNI) – Senate Budget Committee Chairman Kent Conrad and
Sen. Judd Gregg, the ranking Republican on the Budget panel, said
Tuesday that the U.S.’s current fiscal policy, if continued, would be
ruinous for the nation.

In opening comments at a Budget Committee hearing on the U.S.
economy, both Conrad and Gregg described the nation’s fiscal outlook as
grim, even ominous.

Conrad said that budget deficits in the U.S. are likely to fall
significantly from their current level of about $1.4 trillion as the
American economy gains strength.

But “not sharply enough,” Conrad said, adding that President
Obama’s budget shows deficits falling in the first five years and then
beginning to rise.

Some estimates show, Conrad said, that the U.S.’s current fiscal
course would lead to a debt of 400% of GDP by 2054.

“That cannot be the course for the country,” Conrad said.

“That would add too much to the debt,” he said.

Conrad said that a debt load of that level would crush the nation.

“It is absolutely imperative we develop a plan and implement a
plan,” Conrad said.

Gregg agreed that U.S. fiscal policy is in need of a total
overhaul. “The path we’re on is not sustainable as a nation,” he said.

Gregg said the clear focus of fiscal reform efforts should be on
federal spending. He said the federal government is on a path to consume
27% of GDP in the near future, a huge increase from its historic norm
about 19% of GDP.

“We cannot fill this gap (with revenues). The government has grown
too much,” he said.

Gregg said that policymakers now face a “very complicated two step”
challenge as they seek to fortify the “slow, slow” recovery while taking
steps to reign in long-term deficits.

Conrad also expressed concern about the strength of the recovery.

“We are seeing recovery decelerate. That has to be a concern to all
of us,” he said.

** Market News International Washington Bureau: (202) 371-2121 **

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