Former U.S. Federal Reserve Chairman Alan Greenspan on Wednesday warned of "dramatically" rising debt in the United States that could lead to the next economic recession.
"The debt as a percentage of GDP (gross domestic product) is rising very rapidly," Greenspan said in an interview with Bloomberg Television, adding the rising budget deficit and the aging of the population would contribute to further increase of the U.S. public debt.
The U.S. budget deficit rose to a six-year high of 779 billion U.S. dollars in the fiscal year 2018 ending Sept. 30, largely due to the Trump administration's large tax cut and increased government spending.
"The tax cut actually did get a buoyancy, and we' re still feeling some of it, but it' s nowhere near enough to offset the actual deficit," Greenspan said. "You can' t have a tax cut without finding the revenues elsewhere, or you run into problems."
The former Fed chief said he saw "a lot of talk but no realistic movement" to address the problems of rising deficits and debt, which could drag the U.S. economy into a period of stagflation with rising inflation and high unemployment.
Greenspan believed that the next U.S. economic recession is going to come "sometime" and it's going to be driven by "dramatically" rising debt.
The Congressional Budget Office (CBO) has also warned that growing budget deficits would boost U.S. public debt sharply over the next 30 years if current laws generally remained unchanged.
The public debt could approach 100 percent of U.S. GDP by the end of the next decade and 152 percent by 2048, reaching the highest level in the U.S. history, according to the CBO.
