Greenspan favors new taxes to bring down debt

Higher taxes of some sort are needed to bring down the U.S. budget deficit and national debt, former Federal Reserve Chairman Alan Greenspan said Friday.

Greenspan asserted that lawmakers should consider radical changes to tax and spending regimes in the country in order to bring an expanding national debt under control.

"The budget is so badly out of balanced that we've got to do something, and I think it's got to be both on the spending time and the taxing side," Greenspan said at The Atlantic magazine's "First Draft of History" event this morning.

The former Fed chairman has long been a critic of imbalanced budgets, having emphasized the need for more financially sound government balance sheets.

He emphasized the need for new taxes to fund the deficit, but said he personally favored a "value added tax," which assesses an adjustable tax on different stages of production of a good.

"It's the least worst way to come at this from the revenue side," Greenspan explained, adding: "I hope that if we do put it on, we take the whole income tax structure and bring it down slightly."

Greenspan predicted that addressing the debt would determine a good deal of economic and political issues in the years to come.