The United States must move to rein in its massive budget deficits or it faces the risk of a bond market crisis, former Federal Reserve Chairman Alan Greenspan said on Sunday. "We've got to resolve this issue," Greenspan said of the ballooning US debt levels.
He spoke about the issue as a panel, chaired by former White House chief of staff Erskine Bowles and former US Senator Alan Simpson, is due to deliver a report on debt and deficits by December 1. A draft report made public last week offered a series of politically tough tax and spending choices that would seek to reduce the debt by $4 trillion by 2020.
He said the risk is that the deficit, which hit $1.3 trillion this year, could spook the bond market. That would result in long-term interest rates moving up rapidly and could lead to a double-dip recession.