Fed Chief: Gov't Budget on 'Unsustainable Path'

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WASHINGTON -- Just as huge government debts have already wrecked countries throughout Europe, the Federal Reserve warned that the nation's mounting federal debt is a threat to America's economy.

In testimony on Capitol Hill Wednesday, Federal Reserve Chairman Ben Bernanke said the United States has to do something to get its deficits under control.

While Bernanke expressed the belief the economy "appears to be back on track," he cautioned it'll be difficult to get the rising federal debt under control.

"The federal budget appears to be on an unsustainable path," the Fed chief said.

CBN News spoke with Gretchen Hamel of the group "Public Notice" about the current deficit and the state of the U.S. economy.  Click play to watch.

He called on lawmakers to come up with a plan to reduce the federal deficit.

The national debt currently stands at a massive $13 trillion. Five years from now, it's expected to grow just shy of $20 trillion, according to the Treasury Department.

Budget hawks have been worried the U.S. is headed down the same financial path as Europe, which is roiled by debt crises across the continent.

Concern about the European situation last month sent U.S. stocks spiraling to their worst month in more than a year. The reverberations have the potential to stunt the global economy.

International Monetary Fund Deputy Managing Director Naoyuki Shinoharal warned the outlook is "unusually uncertain and the downside risks have risen significantly."

Debt in the U.S. has grown rapidly with the recession and increased government spending to spur the economy and create jobs.

One lawmaker at Wednesday's hearing pointed out that the president's economic experts have said a 1 percent increase in gross domestic product can create about a million jobs. But that 1 percent was also what experts believe the country is losing, because of the debt's massive drag on the economy.

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CBN News
John Jessup

John Jessup

CBN News Anchor

John Jessup serves as the main news anchor for CBN, a position he assumed after 10 years reporting for the network in Washington, D.C. His work in broadcast news has earned him several awards in reporting, producing, and coordinating elections coverage. Follow John on Twitter @JohnCBNNews and "like" him at Facebook.com/John.V.Jessup.