Summary: A speech was given which discussed the federal deficit and public debt. The federal government has had a deficit every year since 1970, and the public debt has risen to more than $1.5 trillion. If the government continues to run at a deficit, its demand for credit will collide with the private demand for credit, forcing interest rates up. High interest rates discourage borrowing for productive domestic capital investment and mean slower growth of productive capacity in the future and slower growth of the economy. However, current evidence seems to conflict with this. Relatively high interest rates have encouraged an enormous influx of foreign capital, equal to half or more of the deficit, which has permitted private investment to continue. However, this means that the rest of the world is financing the United States' current standard of living and has resulted in less competitive exports on world markets. The United States cannot afford to become addicted to drawing on increased amounts of foreign savings to help finance its internal economy. Although Congress has passed separate budget resolutions, implementing actions have not yet taken place. GAO believes that: (1) the deficit cannot be controlled by concentrating on the spending side of the budget, but in finding an acceptable way to restore the revenue base; and (2) without reliable information about costs and results of ongoing federal programs, it is difficult to develop reliable estimates of future requirements.
