Greenspan warns of rising deficits

Federal Reserve Chairman Alan Greenspan warned Thursday that unless lawmakers come to grips with spiraling deficits, the U.S. economy was at risk of stagnation "or worse." "Under existing tax rates and reasonable assumptions about other spending...projections make clear that the federal budget is on an unsustainable path, in which large deficits result in rising interest rates and ever-growing interest payments that augment deficits in future years," Greenspan told the Senate Budget Committee. He said that while the economy was "doing well," the danger was that deficits would keep rising as a percentage of total national output. "Unless that trend is reversed, at some point these deficits would cause the economy to stagnate or worse."