Fed Chairman Alan Greenspan is coming out with his worries over large budget deficits and tax cuts.

On the same day that Federal Reserve Chairman Alan Greenspan issued a fresh warning about the dangers of bloated budget deficits, Congress considered new tax breaks for the energy industry and an $81 billion measure to pay for U.S. military operations in Iraq and Afghanistan.

The events Thursday illustrated the challenges —— "hard choices," as Greenspan put it —— that policy—makers face in trying to control spending.

Greenspan, who steadily has pressed lawmakers, told the Senate Budget Committee that unless the situation is reversed, the economy in the years ahead could "stagnate or worse."

Hat tip: Max G.