US Federal Reserve Board chairman Mr Alan Greenspan yesterday urged legislators to delay tax cuts and to instead use projected budget surpluses to pay down the federal debt.
"This is the ideal time" to reduce the federal debt, Mr Greenspan told the Senate Banking Committee in semi-annual congressional testimony on the US economy.
"I would certainly agree that if you can't do it in a significant way now, I can't imagine circumstances being more favourable to debt reduction at this point.
"We probably would be better holding off on a tax cut immediately. Surpluses are doing a lot of positive good for the economy. We should be cautious in the beginning and (there is) no problem in delay," Mr Greenspan said.
After repeating testimony on US monetary policy he gave last week to the House Banking Committee, Mr Greenspan faced senators' questions, nearly all of which reflected the debate over what to do with what the White House predicts will be surpluses of $99 billion dollars this year and $142 billion in fiscal 2000. Mr Greenspan acknowledged that a withdrawal of foreign funds from the United States, were it to occur, would raise interest rates and slow economic growth.
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