President George W. Bush says the best ways to handle the yawning trade deficits is to persuade other countries to remove trading barriers and open their markets to US companies. Democrats, including Senator John Kerry, Bush's former rival for the presidency, have blamed Bush's free-trade policies for the loss of US jobs.
``What Greenspan is saying is that the United States is being financed by the rest of the world. We cannot continue to keep on spending. Sooner or later we have to pay our debt,'' said Oscar Gonzalez, economist at John Hancock Financial Services.
Greenspan said that although there's been evidence that "among developed countries, current account deficits, even large ones, have been diffused without significant consequences, we cannot become complacent."
Reducing the federal budget deficit or moving it to surplus, Greenspan said, would be an important action to boost US savings. The deficit hit US$412 billion, a record in dollar terms, in the budget year that ended Sept. 30.
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