Feb boss: Threat from deficit 'real and growing'

PROVIDENCE, R.I. (AP) — The economy could be hurt if Congress and the White House fail to come up with a plan to curb the nation's huge budget deficits in the coming years, Federal Reserve Chairman Ben Bernanke warned today.

Bernanke, in a speech prepared for delivery, reiterated his belief that the government shouldn't raise taxes or slash spending now because the economic recovery is still too fragile.

But failing to bring the deficits under control could endanger the economy later on, he said. Exploding budget deficits can lead to higher interest rates for people buying homes and cars, and for businesses buying equipment or expanding operations. That could crimp Americans' spending and slow economic growth.

"The threat to our economy is real and growing," Bernanke said. "The sooner a plan is established, the longer affected individuals will have to prepare for the necessary changes."