Federal Reserve Chairman Alan Greenspan believes the US's budget is out of control, according to French Finance Minister Thierry Breton.
|US Federal Reserve Board Chairman Alan Greenspan (L) is greeted by International Monetary Fund Managing Director Rodrigo de Rato (R) before the start of the International Monetary and Financial Committee (IMFC) meeting September 24, 2005 at the IMF Headquarters in Washington, D.C. The IMFC meeting was Greenspan's last as Chairman of the U.S. Federal Reserve. IMF Staff Photographer/Michael Spilotro|
"We've lost control of the budget," Greenspan apparently told Breton during a bilateral meeting Saturday at the half-yearly World Bank/IMF Meetings, the French minister said at a press conference in Washington.
The cost of Hurricane Katrina will cause the US budget deficit to rise by much more than expected this year, Breton said after meeting with Greenspan.
Before Katrina, the White House was estimating that the government would produce a budget deficit of $333 billion this year. Storm-related rebuilding costs will exceed $200 billion and make the deficit swell significantly further, economists forecast.
A senior official from the US Treasury suggested that the French minister must have misunderstood Greenspan’s remarks. “Things can get lost in translation,” the official said.
The US Treasury also rejected any suggestion that the deficit was out of control. “This administration is absolutely committed to the President’s goal of halving the deficit as a percentage of GDP by 2009 and we have every expectation of meeting that goal,” a spokesman said.
Earlier, the French minister said that both he and Greenspan had expressed disappointment “that the management of debt is not a political priority today”. “The United States has lost control of its budget at a time when racking up deficits has been authorised without any control (from the US Congress),” Breton said.