Europe's debt crisis shows the risks for the United States if it does not get its budget deficits under control, former Federal Reserve Chairman Paul Volcker said on Tuesday.

If we need any further illustration of the potential threats to our own economy from uncontrolled borrowing, we have only to look to the struggle to maintain the common European currency, to rebalance the European economy, and to sustain political cohesion of Europe, Volcker said.

Volcker, a special adviser to President Barack Obama, said many well-developed economies were becoming aware of the hazards of running unprecedented levels of public debts as they emerge from the global recession.

The U.S. budget deficit hit $1.4 trillion in 2009, roughly 10 percent of the economy. The White House projects the deficit this year will reach $1.6 trillion.

The large deficits have evoked comparisons to Greece.

But in a speech to the Stanford Institute for Economic Policy Research in California, Volcker said the United States differs from that country and other small European countries whose credit markets have come under speculative attack.

Unlike those countries, the United States benefits from well-established currency and credit markets that are considered safe havens in times of financial turmoil.

Still, Volcker said there are lessons for the United States in Europe's woes and he warned of the need to address long-term budget problems, such as the expected growth in social programs as the U.S. population ages.

There are serious questions, most immediately about the sustainability of our commitment to growing entitlement programs, said Volcker, who heads an outside panel of experts advising Obama on the economy.

ECONOMIC RECESSION

Volcker, who conquered runaway inflation during the 1980s through interest-rate increases that pushed the U.S. economy into a recession, said the $1 trillion rescue aimed at quelling the European debt crisis did not take away the need for countries to accept tough medicine.

Financing can buy time, but not indefinite time. The underlying hard fiscal and economic adjustments are necessary, he said.

In a pair of interviews before the speech, Volcker said the crisis posed a major test for the euro but said the rescue underscored a commitment to the currency.

In an interview with Fox Business Network, Volcker said, I think what is going on in Greece is obviously a challenge to the euro and to the success of the euro.

But he added that Europe has shown a determination to keep this together.

In London last week, Volcker said that Europe's debt troubles had led him to worry about the future of the currency.

Asked in the Fox interview whether parity with the dollar was where the euro was headed, Volcker noted there had been a lot of ups and downs in the currency.

I think these fluctuations, frankly, are excessive, he said.

Volcker, speaking in a separate interview with Bloomberg radio, described the European rescue package as breathtaking in size.

He disagreed with critics of the European Central Bank who believe its role in the rescue might compromise its independence. I don't think they've lost any credibility in the process, he said.

(Writing by Caren Bohan in Washington; Editing by Will Dunham and Philip Barbara)

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