U.S. government leaders must show responsibility and leadership by ending the nation’s reliance on borrowing even as they impose rules on Wall Street risk-taking, Federal Deposit Insurance Corp. Chairman Sheila Bair said.
“Excessive government borrowing poses a clear danger to our long-term financial stability,” Bair said today in remarks prepared for a speech in Boston. “Fixing these problems will require a bipartisan national commitment to a comprehensive package of spending cuts and tax increases over many years.”
Bair commented a day after President Barack Obama’s debt- reduction commission unveiled a $3.8 trillion plan to trim budget deficits by cutting benefits and eliminating tax breaks. The commission plans to vote tomorrow on the proposal, which would reduce the deficit from $1.3 trillion this year to $421 billion by 2015. Approval by 14 of the panel’s 18 members would send the plan to Congress.
“While opinions differ as to exactly what combination of spending cuts and revenue increase will be necessary, we can be sure that most of the needed changes will be unpopular,” Bair said. “But only with a comprehensive package can we truly achieve the long-term budget discipline needed to preserve our nation’s credibility in global financial markets.” Washington must look past “narrow partisan interests” and take the steps needed to secure the nation’s economic future, Bair said.
“Republicans will need to accept something on the tax side and Democrats will need to accept something on the spending side,” she said in comments after the speech. “Everybody is going to have to compromise.”
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