Editor’s Note – Fed Chairman Ben Bernanke gives us another dire warning, yet the Democrats in the Senate threaten to take America over the cliff if they do not get their way. What is their way?
Their way is to announce that the Republicans better do as they wish – or again, they will not pass yet another budget. All this under the rubric of “compromise”. That is a very deceptive word when used by liberals. It means that the Republicans must raise taxes as part of any long term deal. However, in November 2010, the people elected new members to Congress to do exactly the opposite.
The answer is simple, they want bigger government and they will not let a good crisis go by without taking advantage. They speak of the “middle class” needing help, but guess who gets whacked the most when ‘Taxmeggedon’ hits in January 1st? The rich need to pay their fair share is the mantra, yet almost half of working Americans pay zero income taxes.
Twisted logic; meant to confuse you, to make you “compromise”.
Bernanke pleads with lawmakers to take action on ‘fiscal cliff’By Peter Schroeder – The Hill
Addressing the cliff is the “most effective way Congress could help to support the economy right now,” he says.
Federal Reserve Chairman Ben Bernanke pleaded with lawmakers Tuesday to take action swiftly to avoid taking the nation’s economy over a “fiscal cliff.”
In testimony to the Senate Banking Committee, Bernanke said the economy has leveled off and warned Congress it will add to economic instability if it does not take action to avoid steep tax hikes and spending cuts set to begin in January.
“Fiscal decisions should take into account the fragility of the recovery,” Bernanke said. “That recovery could be endangered by the confluence of tax increases and spending reductions that will take effect early next year if no legislative action is taken.”
Addressing the cliff is the “most effective way Congress could help to support the economy right now.”
The George W. Bush-era tax rates are set to expire on all income brackets on Jan. 1, and spending cuts for defense and non-defense programs are also set to begin that month.
If lawmakers fail to act, Bernanke said, they could see a repeat of the drama from last summer, when stocks plunged amid uncertainty over whether the nation’s debt limit would be raised by Congress.
With a newly worried tone, Bernanke called on lawmakers to come together as soon as possible to address the nation’s finances.
“Doing so earlier rather than later would help reduce uncertainty and boost household and business confidence,” he said, calling on members to find a balanced policy that makes the nation’s finances sustainable, but not in so dramatic a fashion it endangers the recovery.
Bernanke made it clear the recent uptick in the unemployment rate is not a seasonal blip, but an indication of broader weaknesses facing the nation’s labor market.
“Issues related to seasonal adjustment and the unusually warm weather this past winter can account for a part, but only a part, of this loss of momentum in job creation,” he said.
He said unemployment has “leveled out” at slightly above 8 percent and is unlikely to drop significantly further.
“The reduction in the unemployment rate seems likely to be frustratingly slow,” he added.
Bernanke’s latest remarks mark a shift from recent months, as he previously indicated that while data on the economy had cooled, it was not clear how much of it was a genuine slowdown versus a seasonal correction brought on by the unseasonably warm winter. In June testimony before Congress, Bernanke said the “apparent slowing in the labor market may have been exaggerated” by seasonal issues.
Bernanke gave no hints that the Fed is prepping to do more to boost the laggard economy. Instead, he reiterated the moves the Federal Open Market Committee (FOMC) made at its June meeting, where Fed officials agreed to extend for six months “Operation Twist,” the portfolio reorientation that has the Fed overloading on longer-term debt in an attempt to spur lower borrowing rates. It also agreed to maintain its policy of predicting near-zero interest rates through the end of 2014.
With markets watching Bernanke’s every move as the recovery staggers, the chairman told lawmakers the Fed is “prepared to take further action as appropriate.” The FOMC meets again to set policy at the end of July.
After the economy added jobs at a clip of roughly 200,000 per month at the end of 2011 and beginning of 2012, the last three months have shown a substantial slowdown, with monthly gains of about 75,000 per month. That’s not enough to keep up with the nation’s population growth, let alone cut into the jobless rate.
The slow growth of the job force is just one indication of an economy that “appears to have decelerated somewhat” over the last several months, in Bernanke’s words.
In discussing why the U.S. economy seems to be hitting the brakes, Bernanke identified a number of obstacles, including the “fiscal cliff” and continued financial drama in Europe.
On Europe, Bernanke warned that the continent still poses substantial risk to the United States, even as policymakers there have taken steps to address the situation.
“The possibility that the situation in Europe will worsen further remains a significant risk to the outlook,” he said. “Although the politics are complex, we believe that the European authorities have both strong incentives and sufficient resources to resolve this crisis.”