The United States has "lost control" of its budget deficit

Greenspan to French Finance Minister: US lost deficit control
Sat Sep 24, 2005 9:00 PM ET

By Paul Carrel

WASHINGTON, Sept 24 (Reuters) - U.S. Federal Reserve Chairman Alan Greenspan told France's Finance Minister Thierry Breton the United States has "lost control" of its budget deficit, the French minister said on Saturday.

"'We have lost control,' that was his expression," Breton told reporters after a bilateral meeting with Greenspan.
"The United States has lost control of their budget at a time when racking up deficits has been authorized without any control (fromCongress)," Breton said.

"We were both disappointed that the management of debt is not apolitical priority today," he added.
Ministers from the Group of Seven rich nations on Friday called for vigorous action around the world to curb rising imbalances in international trade and investment accounts.

A decrease in the U.S. budget deficit were cited by the G7 as one wayto ease those imbalances. U.S. Treasury Secretary John Snow said the U.S. administration was still committed to halving its budget deficitby 2009.

Breton spoke as International Monetary Fund Managing Director Rodrigo Rato said U.S. plans to cut its government expenditures now lookedambitious in the light of huge reconstruction costs to be borne in the wake of Hurricane Katrina.

Breton said: "The situation that is creating tension today on the currency market ... is clearly the American deficit." The United States needed to address its budget deficit, he said, adding: "It seems to me that my counterpart John Snow is completely aware of this, he wants to harness the problem, but it seems to me he doesn't have the room for maneuver."

Breton added that after hearing Greenspan talk about inflation: "One has the feeling -- though he didn't say so -- that interest rates will probably continue to rise....

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