Eric Engen News Today

<p><span>I would like to thank the Bank of Japan and Governor Ueda for organizing this years conference and for the invitation to participate in this afternoons panel.</span><a href="https://www.federalreserve.gov/newsevents/speech/bowman20240528a.htm#fn1" title="footnote 1"><span>1</span></a><a name="f1"></a><span> The topic of "the effects of conventional and unconventional policy instrument...

Focusing on budget deficits is misguided. The debt ratio, a superior measure of government's debt burden, is as dependent one conomic growth as federal borrowing. A growing economy can absorbmodestly increasing debt levels, and streamlining wasteful spendingwhile pursuing a pro-growth tax policy can simultaneously reducedebt levels and make debt more affordable.

Democratic presidential candidate John Kerry's promise that, ifelected, he will halve the budget deficit by 2008 ignores the mountain of impending entitlement spending that, if leftunreformed, will dwarf any achievable savings. His ambitiousspending plans would also require a $2,090 per household taxincrease in order to fulfill his deficit-reduction pledge.

Federal government debt has nearly doubled since President Barack Obama took office. Recent progress toward reducing the annual budget deficit is welcome, yet federal debt is still projected to increase 50 percent over the next decade—and then rise rapidly thereafter—under existing policies.[1] As federal debt has soared, so have concerns about America’s future. Used properly, debt can safely finance private and government investment in productive capital to support economic growth.

The Bush tax cuts did not cause the budget deficit because the budget would have still fallen into deficit due to national security, runaway spending, and economic factors. The national debtis not large enough to raise interest rates. Lawmakers should bemore concerned for the $42.9 trillion in unfunded Medicare andSocial Security costs over the next 75 years.