Bernanke warns against US budget-cutting on education and training
03 Mar 2011
Federal Reserve chairman Ben S Bernanke has warned US federal and state governments against cuts in spending on education and training progammes, that he said are key to US competitiveness.
He said the increase in taxes along with reduction in spending by state and local governments combined with high fuel prices will constrain a nascent economic recovery in the US.
Burdened with bulging deficits and falling pension funds, federal, state and local governments in the US are cutting social spending in a bid to balance their budgets.
While the trade-offs are "daunting," Bernanke has advised states to adjust their tax codes and budget policies to avoid severe cutbacks during recessionary periods.
The US economy has shown continued growth, although at a moderate pace, at the beginning of 2011, with conditions improving gradually in a wide range of industries, the Federal Reserve said in a report released yesterday.
While identifying rising price pressures, particularly oil and other sources of energy, Bernanke urged political leaders not to lose sight in their efforts to deal with fiscal problems.
In the long run, Bernanke said, "The most important fiscal issue is whether the structure and composition of the government budget best serves the public interest."
