Restoring US balance to be 'painful'

Erskine Bowles, the co-chairman of US administration's deficit commission

Source: Press TV
http://www.presstv.ir/detail.aspx?id=134888§ionid=3510203


Leaders of US administration's deficit commission say restoring US fiscal balance will be a painful process that requires not only spending cuts but also some tax increases.

Erskine Bowles and Alan Simpson said at a U.S. Chamber of Commerce event on Thursday that the bipartisan panel is eying tax breaks which include the deduction of popular mortgage interest and cutting government spending in its effort to recommend ways to cut the estimated $1.4 trillion federal deficit.

"It is all going to be very painful," Reuters quoted Bowles as saying.

He also made it clear that he believed about 75 percent of the deficit reduction effort should come from spending cuts and 25 percent from revenue increases.

"I just want to see the vast majority of it come out of spending," added Bowles.

He warned that the US federal debt would probably hit more than 14 trillion dollars in 2011.

Bowles earlier said the deficit was like a cancer that would destroy the country from within unless tough action was taken by Washington.

His comments come as the US Federal Reserve says US unemployment will reach 9.2 to 9.5 percent by the end of this year. It has also noted that the economic recovery continues but with a moderate pace.

US Federal Reserve released a report Wednesday that depicted a gloomier picture of US growth outlook than what was expected.

According to the report the retail numbers are lower, mortgage applications fell and the country is not growing as fast as expected.