Bernanke: Current policies won't work

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WASHINGTON, Feb. 2 (UPI) -- U.S. Federal Reserve Chairman Ben Bernanke told a House panel in Washington Thursday current tax policies are not sustainable in the long term.

In prepared remarks for the House Committee on the Budget, Bernanke said addressing the national deficit is a "top priority."

"The federal budget deficit widened appreciably with the onset of the recent recession, and it has averaged around 9 percent of gross domestic product over the past three fiscal years," he said.

Bernanke blamed the recession, tax policies and efforts to combat the economic downturn as the primary culprits for the ballooning deficit.

He said assuming "most" of the current tax provisions are extended and Medicare reimbursement rates are left unchanged, the deficit would slide to 4 percent of GDP by 2017. But that assumes "close to full employment," he said.

"Of even greater concern is that longer-run projections, based on plausible assumptions about the evolution of the economy and budget under current policies, show the structural budget gap increasing significantly further over time," he said.

"This dynamic is clearly unsustainable," he said.