Yellen: National debt 'should keep people awake at night'

Yellen: National debt 'should keep people awake at night'
© Camille Fine

The fact that U.S. debt is about to soar past $20 trillion "is the type of thing that should keep people awake at night," outgoing Federal Reserve Board Chairwoman Janet YellenJanet Louise YellenSigns of global stress will test Federal Reserve on economy Who is the boss when it comes to Federal Reserve and Congress? Kudlow: Fed should 'move very slowly' on rate hikes MORE said Wednesday in testimony to Congress.

"This should be a very significant concern," Yellen told the Joint Economic Committee.

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She said expenditures on Medicare, Medicaid and Social Security will grow more rapidly than tax revenues as the U.S. population ages.

Yellen said the U.S economy was strong beyond the ballooning national debt, with the country near full employment and the financial system steadied by Dodd-Frank. She said that the Fed would likely raise interest rates soon to bring monetary policy back toward historic levels.

Some of the Fed's liberal members have expressed concerns about raising rates with inflation still lagging below the Fed's 2 percent target. Fed leaders, including Jerome Powell, Trump's nominee for Fed chair, say they're not sure why prices have increased a lower rate than ideal.
 
But Yellen, who's favored a slow increase in rates, said rate hikes are essential to avoid creating a "boom-bust" economy.
 
Yellen avoided specific comments on the GOP tax-cut bill, which the Senate is expected to vote on this week. It is projected to add $1.4 trillion to the deficit over the next decade, though GOP leaders argue it will boost growth and thus lower the deficit over time.