Greenspan: Threat to U.S. Fiscal Stability Larger Than Ever

Former Federal Reserve Chairman Alan Greenspan said in prepared testimony the threat to U.S. fiscal stability is larger than ever, mostly because of rising medical costs.

Averting a situation where the U.S. struggles to finance unprecedented budget deficits "is more urgent than at any time in our history," he said in testimony Thursday before the Senate Committee on Homeland Security and Governmental Affairs.

Mr. Greenspan argued that the problem of large projected shortfalls in Medicare and Medicaid can't be wiped away with more appropriations from Congress. "It is a physical resource crisis," he argued, which will suck more of the U.S. labor force and capital investment into the medical sector.

"A dollar of the nation's scarce savings employed to finance a new medical technology investment is a dollar not available to fund other critical, non-medical, cutting-edge technologies that enhance our material wellbeing," he said. (more)