U.S. President Barack Obama has asked the new financial control commission to confront "hard truths" about the government's growing deficit The chairman of the nation's central bank told the panel that Washington's budget is on an unsustainable path.
President Obama says America's leaders have traditionally ducked tough decisions about cutting spending. "For years, folks in Washington deferred politically difficult decisions and avoided telling hard truths about the nature of the problem," he said.
Mr. Obama spoke at the White House before the first meeting of the National Commission on Fiscal Responsibility and Reform. He established the bipartisan group in February to tackle the U.S. deficit, which reached $1.4 trillion in 2009.
The president said his administration has taken some steps to cut the deficit, including passing health-care reform and freezing the level of government spending. But Mr. Obama said further action is needed and he acknowledged that some of it is likely to be politically unpopular.
"This is going to require people of both parties to come together and take a hard look at the growing gap between what the government spends and what the government raises in revenue, and will require that we put politics aside, that we think more about the next generation than the next election," he said. "There is simply no other way to do it."
The leader of the U.S. central bank, Federal Reserve Chairman Ben Bernanke, told the commission he expects the deficit to narrow during the next few years, as the economy continues to recover.
But many economists project the deficit will remain at at least four percent of the U.S. economy for the next 10 years. And Bernanke said serious action is needed to prevent greater damage to the economy.
"Even after economic and financial conditions have returned to normal, in the absence of further policy actions, the federal budget appears set to remain on an unsustainable path," said the Fed chief.
The Fed chairman agreed with the president that difficult decisions need to be made soon, and he urged the White House and Congress to produce a credible plan to reduce the deficit.
"The path forward contains many difficult trade-offs and choices, but postponing those choices and failing to put the nation's finances on a sustainable long-run trajectory would ultimately do great damage to our economy," he said.
President Obama told reporters neither he nor his commission members will say publicly what options they are considering until the decisions are made. He has set a December 1 deadline for the group to submit its final report.
