The budget deficit is poisoning the American economy, and strong medicine will be necessary to cure the problem, warns Federal Reserve Board Chairman Alan Greenspan.

Greenspan told the bipartisan National Economic Commission Wednesday that Congress and the new White House must agree on direct action to reduce the deficit and that cuts in government spending should be the focus of long-term deficit relief. He would not comment on whether additional taxes are needed."The emphasis has got to be . . . on the expenditure side," Greenspan said.

Taking issue with those who believe economic growth alone can provide enough revenue to eliminate the deficit, the Fed chairman said such a policy cannot work. During his successful presidential campaign, Vice President George Bush insisted the country could grow out of its deficit without higher taxes by reducing the rate of federal spending and by expanding the economy.

"We have to face the fact that that is not a realistic option," Greenspan said Wednesday, "and one must approach the issue in terms of reducing the deficit directly and not hoping it will go away."

Bush also has pledged not to cut Social Security or defense outlays while spending more on education, child care, the environment and the anti-drug war.

Commission co-chairman Robert Strauss has emphasized that the deficit cannot be solved unless Congress and the White House are willing to bring everything to the table in terms of spending cuts, including Social Security benefits, Medicare and defense spending.

Former Labor Secretary William Brock and U.S. Chamber of Commerce economist Richard Rahn were among more than two dozen people who testified along with Greenspan Wednesday.