under most reasonable sets of actuarial assumptions, currently amount to many trillions of dollars for social security benefits alone. even if accrual accounting is set aside, it might still be prudent to eschew new longer - term, potentially irreversible commitments until we are assured that the on - budget surplus projections are less conjectural than they are, of necessity, today. allowing surpluses to reduce the debt to the public, rather than for all practical purposes irrevocably committing to their disposition in advance, can be viewed as a holding action pending the clarification of the true underlying budget outcomes of the next few years. debt repaid can very readily be reborrowed to fund delayed initiatives. more fundamentally, the growth potential of our economy under current circumstances is best served, in my judgment, by allowing the unified budget surpluses presently in train to materialize and thereby reduce treasury debt held by the public. yet i recognize that growing budget surpluses may be politically infeasible to defend. if this proves to be the case, as i have also testified previously, the likelihood of maintaining a still satisfactory overall budget position over the longer run is greater, i believe, if surpluses are used to lower tax rates rather than to embark on new spending programs. history illustrates the difficulties of keeping spending in check, especially in programs that are open - ended commitments, which too often have led to larger outlays than initially envisioned. decisions to reduce taxes, however, are more likely to be contained by the need to maintain an adequate revenue base to finance necessary government services. moreover, especially if designed to lower marginal rates, tax reductions can offer favorable incentives for economic performance. conclusion as the us economy enters a new century as well as a new year, the time is opportune to reflect on the basic characteristics of our economic system that have brought about our success in recent years. competitive and open markets, the rule of law, fiscal discipline, and a culture of enterprise and entrepreneurship should continue to undergird rapid innovation and enhanced productivity that in turn should foster a sustained further rise in living standards. it would be imprudent, however, to presume that the business cycle has been purged from market economies so long as human expectations are subject to bouts of euphoria and disillusionment. we can only anticipate that we will readily take such diversions in stride and trust that beneficent fundamentals will

jerome h powell : brief remarks on the us economy speech by mr jerome h powell, chairman of the board of governors of the federal reserve system, at rhode island business leaders day, washington dc, 27 september 2018. * * * good afternoon. thank you, senator reed, for the kind words and the opportunity to be a part of the annual rhode island business leaders day. and thank you, all, for sticking with the program for the last speaker of the day. the federal open market committee, the body within the federal reserve that sets monetary policy, just concluded a meeting yesterday. i plan to talk briefly about how my colleagues and i see the economy evolving and our role in keeping it healthy. importantly, i want to hear from you. i very much appreciate your views, as business people, of economic conditions where you live and work. and, of course, i will be happy to respond to questions. our economy is strong. growth is running at a healthy clip. unemployment is low, the number of people working is rising steadily, and wages are up. inflation is low and stable. all of these developments are very good signs. of course, that is not to say that everything is perfect. the benefits of this strong economy have not reached all americans. many of our countrya€™s economic challenges are beyond the scope of the fed, but we are doing all we can to keep the economy strong and moving forward. that is the best way we can promote an environment in which every american has the opportunity to succeed. each time we meet, we face the same question : how can we set monetary policy to best support job growth and low, steady inflation? for many years, this question called for very low interest rates to help an economy that had been damaged by the deep financial crisis that gripped the world 10 years ago. as the economy has steadily gained strength, the fed has been gradually returning interest rates closer to the levels that are normal in a healthy economy. we took another step on that path yesterday, with a quarter - point increase in short - term interest rates. these rates remain low, and my colleagues and i believe that this gradual return to normal is helping to sustain this strong economy for the longer - run benefit of all americans. as i mentioned, 10 years have now passed since the depths of the financial crisis a painful part of our history that cost many americans their jobs, their homes, and, for some, their hopes and dreams. in addition to holding interest