Fed Reserve Chairman Jerome Powell warned lawmakers Tuesday that the federal government is on an unsustainable fiscal path, with debt as a percentage of GDP growing quickly: “We need to stabilize debt to GDP,” he said in semiannual testimony before the Senate Finance Committee. “The timing of doing that, the ways of doing it — through revenue, through spending — all of those things are not for the Fed to decide.”
Powell said that, over time, the country will wind up spending “more and more of our precious revenues” on interest payments on the debt “as opposed to investing in the things that we really need … so that we can compete in the global economy.”
Powell added that, as he sees it, the “single biggest thing” that drives the fiscal unsustainability is our health care system. “We deliver health care outcomes that are pretty average for a well-off country, but we spend 17 percent of GDP doing it, everyone else spends, on average, 10 percent of GDP,” he said. “It’s not that benefits themselves are too generous. It’s that we deliver them in highly inefficient ways.”
