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Econwatch
June 3, 2009 10:22 AM

Bernanke: Time To Act On Red Ink

Topics
Recession
(AP Photo/Susan Walsh)
Testifying before the before the House Budget Committee, Federal Reserve Chairman Ben Bernanke urged Congress and the Obama administration Wednesday to start plotting a strategy to curb record-high U.S. budget deficits.

"Even as we take steps to address the recession and threats to financial stability, maintaining the confidence of the financial markets requires that we, as a nation, begin planning now for the restoration of fiscal balance," Bernanke said.

In May it was reported that the deficit for the current budget year will rise by $89 billion to above $1.8 trillion - about four times the record set just last year. The unprecedented red ink flows from the deep recession, the Wall Street bailout, the cost of President Barack Obama's economic stimulus bill, as well as a structural imbalance between what the government spends and what it takes in

The recession has taken a bite out of tax revenues paid by people and companies. At the same time, the government's spending has risen, paying billions to shore up banks, help the unemployed and others hurt by the downturn, the longest since World War II. For the current year, the government would borrow 46 cents for every dollar it takes to run the government under the administration's plan.

Bernanke said that such forceful government intervention to fight the worst financial crisis since the 1930s and lift the U.S. out of recession was "necessary and appropriate" even though it worsened the nation's budget deficit.

At the same time, he cautioned politicians: "Unless we demonstrate a strong commitment to fiscal sustainability in the longer term, we will have neither financial stability nor healthy economic growth."

The chairman didn't offer specific recommendations on what steps they should take to bring the deficits under control.

Ben Bernanke Addresses The Need To Restore Fiscal Balance


Add a Comment See all 34 Comments
by sjc_1 June 5, 2009 6:29 PM EDT
No one said a thing as Bush stacked up $5 TRILLION dollars in debt, but now that we need spending to get us out of the mess Bush created, that is so horrible. Come on guys, economics says you increase revenue during expansion and spend during recession. We have no choice, if we did nothing the depression would last for a decade or longer.
Reply to this comment
by lozomak June 5, 2009 9:54 AM EDT
when all this gonna end ??!
http://www.newforexer.com/
i think its possible by force
Reply to this comment
by platteman June 3, 2009 11:47 PM EDT
Nice job Dufas. For 5 months you say nothing, now all of a sudden it is wait, too much debt. Why not say something way before this. The reason is, you were told to shut up Dufas.
What a crock of you know what. You should have been shouting from the roof tops from day one.
Reply to this comment
by nofoolling June 3, 2009 9:42 PM EDT
I am advocating taking over the banks, oil companies, pharmaceutical and medical insurance corporations and returning the profits to the people. As someone who runs a small corporation, I am in favor of highly regulated capitalism. You can't trust big fascist corporations who took over the government.
Posted by noloyalisti

I second that as the most intelligent thing I've heard all day.

How much longer do we allow them to rape the American public with the assistance of our bought and paid for leaders?
Reply to this comment
by nofoolling June 3, 2009 9:38 PM EDT
How interesting that the front man for the biggest criminal enterprise known to mankind, The Federal Reserve, owned and operated by a shadowy group of rich corrupt bankers led by the Rothchilds and the Rockefellers, who own JP Morgan and Goldman Sachs, would, after raiding the U. S. Treasury for their corporate welfare, tell us we need to get our fiscal house in order.

And the bought and paid for henchlings in the form of the President and all the fiscal committee chairmen in the House and Senate (for the past 95 years) bow down and sell us out to these money men mafiosa.

Kinda like listening to the wolf about hen-house security.

Abolish the Federal Reserve and take back our country.
Reply to this comment
by tenbobnote June 3, 2009 8:26 PM EDT
I wish Ron Paul was president right now!
Reply to this comment
by stn_sage June 3, 2009 7:41 PM EDT
Note- in first line, 'another' should be ' any one'. Sorry about that.
Reply to this comment
by stn_sage June 3, 2009 7:10 PM EDT
Does another else get the sense that Mr. Bernanke has a serious case of multiple personality disorder?!

One month he's screaming the economy is going to crash unless tons of monies are given to the Federal Reserve and private banking system, thus vastly increasing the national debt; and the next month, he's calling for "fiscal restraint" and balancing the budget!!

Is this "nuts" or what?! Not only should he be fired because he's incompetent, but also because he's "nuttier than a fruitcake"!
Reply to this comment
by g-gfather June 3, 2009 6:57 PM EDT
When your butt deep in alligators it's a little late to drain the swamp. The swamp continues to rise and will de-bubble the fools .Their is a higher ground of uncommon sense . AMISH.

Great-Grandfather. For the children
Reply to this comment
by noloyalisti June 3, 2009 6:03 PM EDT
The country is the most democratic when there is a strong middle class. When people can go on vacations, afford quality education and health care and have leisure time. Also when most of the people can actually afford to buy cars and homes and eat out.

Instead what we have now is a fascist political system where there is a HUGE gap between rich and poor. Big corporations run the government, the media and the military and write the laws.
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