Bernanke to Congress: Address the Debt
Yesterday, Federal Reserve Chairman Ben Bernanke gave a speech to the Rhode Island Public Expenditure Council. He argued that the United States is on an unsustainable fiscal course, and that while he does not advise cutting spending in the next two years, after 2012 Congress needs to get serious about reducing the debt — including reforming the entitlement programs, particularly Medicare and Medicaid.
It sounds, frankly, rote. Take a look at the word cloud of the speech, and your eyes glaze over.
But it was actually one of the more interesting and exciting speeches Bernanke has given of late. He essentially chastises Congress for its lack of seriousness about the debt. And he subtly stakes out a political position: No tax increases for two years, or until the economy really starts growing and adding jobs again, then real tax increases and spending cuts. He even suggests that Congress take up stronger self-regulating guidelines to achieve better fiscal balance. Such political advising is part of Bernanke’s job — he isn’t overstepping some bound — though in the past he has been softer about fiscal issues.