Ex-Fed Kohn: 'Huge Risk' US Won't Take Steps By Year End
NEW YORK (Dow Jones)--There is a real danger U.S. authorities won't take the necessary steps to fix the country's debt and deficit problems between the elections and the end of this year, former Federal Reserve Board Vice Chairman Donald Kohn said Monday.</br></br>"What's required to put the fiscal deficit on a sustainable path are some difficult decisions having to do with entitlement spending and taxes in the United States," Kohn said at the Europlace forum. "There's a high degree of uncertainty ... there's a huge risk that they won't."</br></br>Kohn added the U.S. political system has become "soap opera-ized" with such a huge gulf between the country's political parties there is a real risk debt and deficit will continue to grow past the end of this year.</br></br>He said governments worldwide must not rely on central bankers to get them off the hook for uncomfortable choices.</br></br>"You cannot count on central bank purchases to bail out governments whatever the inflationary consequences," Kohn said.