April 2 The United States must fix its long-term fiscal problems "at some point down the road" by raising taxes, cutting spending, or through some combination of the two, a top Federal Reserve policymaker said on Tuesday.
But "the issue doesn't have to be fixed today, in 2013; it's a problem that's going to come in the early part of the next decade," Minneapolis Federal Reserve Bank President Narayana Kocherlakota told a business group in Grand Forks, North Dakota.
In seven to 10 years, the government's obligations to fund medical and retirement-living costs for the aging U.S. population will outstrip its income from taxes, Kocherlakota said, adding the government will need to bring its expenses in line with its revenues.
"I think that offering guidance to the public about the mix of the tools that's going to be used to address this problem is going to be useful," he said. "Having more certainty about how that resolution will take place would be good."