Federal deficit could hurt economy in long run - KWWL - Eastern Iowa Breaking News, Weather, Closings

Federal deficit could hurt economy in long run

PROVIDENCE, R.I. (AP) -- Federal Reserve Chairman Ben Bernanke says the economy could be hurt if Congress and the White House fail to curb the nation's huge budget deficits in the coming years.

Bernanke, in prepared remarks Monday, reiterated his belief that the government shouldn't raise taxes or slash spending now because the economic recovery is still too fragile.

But failing to bring the deficits under control could endanger the economy in the long run, he warned.  Exploding budget deficits can lead to higher interest rates for people buying homes and cars, and for businesses buying equipment or expanding operations.  That could crimp Americans' spending and slow economic growth.

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