WASHINGTON (AFP) – The massive US budget deficit means the United States will be unable to use deficit spending to stimulate the economy for many years to come, Treasury Secretary Timothy Geithner said Friday.
“It’s not going to be possible in the next decade. We’ve lost the chance,” Geithner told a conference in New Hampshire.
“We no longer have the luxury of that approach.”
Geithner said the $787 billion dollar economic stimulus passed in 2009 by Congress “was absolutely timely” but a temporary effort in response to the economic crisis.
“We’ll have at some point to pay that debt,” he said.
His comments come amid an impasse between the US administration and Republican lawmakers on curbing the budget deficit and lifting the debt ceiling to allow additional US borrowing.
The collapse of the talks on Thursday sparked fears that Congress will fail to raise the $14.29 trillion debt ceiling by an August 2 deadline and force the United States into a default which could trigger global economic shockwaves.
Currently, the US budget deficit is forecast to reach $1.6 trillion this year.