I'm glad Bernanke is reluctantly being straight forward with Washington. There are over 4 MILLION unemployed Americans right now that are collecting UE benefits. The U.S. Debt Clock states that 14,479,858 is the official unemployed number, while 24,271,334 is the actual unemployed number. People don't understand how important these figures are. The massive loss in jobs over the past two years has caused a major decrease in federal income tax revenue. Not to mention, the business' having to close has further deepened the loss in federal tax revenue. Contrary to this fact, our federal government has chosen to increase their spending to new record highs. Folks, this is unsustainable. There is much much more money going out then there is coming in. Washington needs to focus on loosening the noose off the throats of business. There is so much uncertainty in our economy due to all of Obama's policies on the table that business' are frozen. If the federal government does not heed Bernanke's advise today, the bond market will eventually go up in flames! Business first = jobs = more tax revenue = more consumers = more sales = more revenue for all. It's a win-win solution. Afterward health care reform. Americans earning income will be able to pay for health insurance thus increasing the insurance industry customer base thus reducing health care premium cost.
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The Wall Street Journal
written by Sudeep Reddy
Thursday February 26, 2010
Fed chairman says investors' continued faith in U.S. economy could fade quickly without signs that Congress is crafting plans to align federal expenditures and revenue.
Federal Reserve Chairman Ben Bernanke faced a barrage of questions about the risks of a rising federal deficit as he delivered his semiannual economic report to Congress this week.
Mr. Bernanke's repeated response during a pair of hearings was that markets haven't lost faith in the U.S. economy yet. But he said the situation could change quickly without a credible plan from lawmakers to bring projected government spending in line with tax revenue.
"I'm not anticipating anything in the near term, but it is conceivable that it could lead to a loss of confidence in aspects of the U.S. economy," Mr. Bernanke told the Senate Banking Committee on Thursday. "It could affect interest rates. It could affect the value of the dollar. And those things could directly or indirectly affect the state of the economy."
With this fiscal year's deficit projected to hit a RECORD $1.6 trillion, lawmakers pushing for stronger action to rein in the deficit sought to use the central-bank chief's appearances to win support for their cause.
In his appearances before Congress this week, the first since his new term began after a tough confirmation battle, Mr. Bernanke tried to highlight the difficulty of the political decisions while explaining the economics behind them.
"It's very easy for me to say this, because I don't have to grapple with these difficult problems," Mr. Bernanke told House Financial Services Committee members Wednesday. "But it is very, very important for Congress and the administration to come to some kind of program, some kind of plan that will credibly show how the United States government is going to bring itself back to a sustainable position."
The Fed chairman focused his responses on the medium-term deficit, allowing that it is acceptable for near-term deficits to rise while the economy recovers. Mr. Bernanke said deficits need to be brought down to 2.5% to 3% of the nation's gross domestic product to be sustainable.
Investors are still buying government debt at low interest rates, he said, suggesting they are willing to give Congress time to come up with a plan. But he also allowed that they may react sooner without clear signals from Congress.
If the U.S. were to emerge from its recession and deficits weren't brought down, Sen. David Vitter (R., La.) asked, "how quickly would that become a major problem in terms of the economy?"
"It could become a problem tomorrow if bond markets are not persuaded that Congress is serious about bringing down the deficit over time," Mr. Bernanke answered.
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