The House Banking Committee pressed hard to see if Fed Reserve Chaiman Ben Bernanke would benefit their party or candidate in the upcoming presidential elections. Bernanke held his ground, reiterating for congress members that 1 plus 1 still makes 2. Yet some congress members seemed to be still pondering the issue.
Among the things that were brought out:
The current projected deficit doesn’t even count the cost of entitlement debt such as that being incurred by social security. Early in the Bush administration, congress resisted any adjustments to that program and Democrats managed to terrorize seniors during the 2004 elections with the prospect that they were going to be turned out in the cold.
Bernanke also pointed out the Bush tax cuts were set to expire in 2008 and that would have a negative effect on the slowing economy. That was regarded as stonewalling by some congress members on the committee who were hoping for a tax increase and a Democrat in the White House.
Bernanke felt that a bipartisan stimulus plan which puts more money into the pockets of people earning less than $50 k would be helpful in the short term. The short term goal is to get people to continue spending money to boost the economy.
In spite of a constant whip lashing by certain members, Bernanke kept insisting that 1 and 1 still made 2 and that fiscal policy was set by congress and monetary policy was set by the fed. How thick could he be? Bernanke had the nerve to say that additional spending had to be supported by additional revenues or they would have a counteractive effect to a recovery. A Wall Street Journal article today quoted the fed chairman as saying that the U.S. faces “daunting long-run budget challenges associated with an aging population, rising health-care costs, and other factors."
Who the hell is Bernanke, anyway? Didn’t he ever hear of Soylent Green?