US Federal Reserve Chairman Mr Alan Greenspan has warned US lawmakers to rein in the growing US budget deficit or risk the economic future.
"Restoring fiscal discipline must be a high priority," he told the House of Representatives budget committee.
"History suggests that an abandonment of fiscal discipline will eventually push up interest rates, crowd out capital spending, lower productivity growth and force harder choices upon us in the future," he said.
The US budget deficit is set to hit $157 billion this fiscal year, far deeper than first thought, the Congressional Budget Office said last month.
Mr Greenspan urged the House of Representatives panel to renew rules enforcing budget discipline, which are due to expire September 30th.
"Failing to preserve them would be a grave mistake," he said. "For without clear direction and constructive goals, the inbuilt political bias in favor of budget deficits likely will again become entrenched."
Mr Greenspan called for a stricter accounting system for the budget to be adopted.
Under the current system, the government's books would have to show the cost of future retirement benefits as they are earned by workers, not just the amount of benefits being paid out now.
AFP