JACKSON, Wyo. — Federal Reserve Chairman Ben S. Bernanke chided Congress on Friday for its contentious approach to the national debt, saying the brinksmanship displayed by lawmakers could endanger the U.S. economy.
In a rare scolding of Congress, Bernanke said that debt-ceiling negotiations this summer, which flirted with a national default, “disrupted financial markets and probably the economy as well.” Speaking at an annual conference of central bankers and economists in Jackson Hole, he warned that, “similar events in the future could, over time, seriously jeopardize the willingness of investors around the world to hold U.S. financial assets or to make direct investments in job-creating U.S. businesses.”
Bernanke has serious academic credentials and has served under both a Republican president and a Democratic president. He understand complex economic issues. Congress does not. It would behoove them to listen to him. The American economy can never be held hostage again. It isn’t a tool to use to posture one’s political position.
Let it be noted that, according to the New York Times analysis of that speech, Bernanke did not lay blame on either party. He simply asked that a better system be devised in Congress to deal with the debt problem while making sure to avoid negative effects on the struggling economy. The Times called the speech mostly a rehash of his earlier speeches in which he has called for “fiscal measures on long-term reductions in the federal debt, while avoiding short-term cuts or tax increases that might impede recovery.”
The Dems, of course, took the occasion to jump immediately all over the Repubs in a sterling display of the very partisanship Bernanke was NOT calling for.
In fact, Bernanke may not have struck too many chords at all in his Jackson Hole speech when it comes to the next step for the Fed in helping the recovery. As Tom Petruno of the LA Times put it: “With financial markets hoping for something of substance in the Federal Reserve Chairman’s speech on the economy Friday, Bernanke instead cooked up some comfort food.” That “comfort food” consisted of Bernanke’s hopeful feeling that the economy will eventually recover, without specifying what the Fed might do next to help achieve that goal. A bit of a letdown in some quarters.
Bernanke’s speech may have been a letdown for some, but that’s truth be told because it was unreasonable for them to get their hopes up.
Bernanke is communicating much differently than Greenspan did. He’s much more transparent. Greenspan’s Fed would be silent until their periodic meetings where a blandly worded statement would be issued. People waited for his Jackson Hole appearance with hungry anticipation. Meanwhile weeks ago Bernanke had already disclosed the Fed’s intended actions through 2013. There really wasn’t anything left for Bernanke to say at Jackson Hole, and there really isn’t much left for the Fed to do. Some people think the Fed is already doing too much.
It’s a new Fed.
@Wolverine
Actually all one has to do is look at where the hitch in the process was. Bernanke didn’t have to call out individuals, groups, etc. We all know where the problem was.
That should have never happened. The USA has to conduct business. The behavior was irresponsible and sophomoric. He was correct to call out Congress over it. It was a very dangerous situation and it cost many of us a great deal of money.
The Bernanke also said a few choice things.
“Our K-12 educational system, despite considerable strengths, poorly serves a substantial portion of our population.”
A good kick to the gut of our teachers.
“The costs of health care in the United States are the highest in the world, without fully commensurate results in terms of health outcomes.”
Tort reform ftw (for the win!)
“Of course, the United States faces many growth challenges. Our population is aging, like those of many other advanced economies, and our society will have to adapt over time to an older workforce.”
The Bernanke sounds like a fan of Logan’s Run.
Interestingly the Bernanke never said Congress. He said policymakers. That is of course inclusive of the current Administration.
“Of course, formal budget goals and mechanisms do not replace the need for fiscal policymakers to make the difficult choices that are needed to put the country’s fiscal house in order, which means that public understanding of and support for the goals of fiscal policy are crucial.”
Fix entitlement programs. Check.
Now, another way of looking at Bernanke’s speech was that it was like any other politician’s speech… Very broad, open to interpretation and slim on details.
Actually, Moon, you have used the correct term when you say that Bernanke called out “Congress” on the debt ceiling issue. However, what I find not very acceptable is the implication in the phrase: “We all know where the problem was.” May I take the liberty of translating that into ” conservative Republicans”?
Why is it that we seem to have redefined the word “compromise” to mean that, when the two sides clash on the grounds of strongly held principles, our side must knuckle under in order to avoid various negative labels implying lack of patriotism or lack of caring about the fate of the economy and the country? Actually, I think the refusal of either side to cave until some kind of temporary agreement could be reached was a direct response to their differing constituencies — the ones who “brung ’em to the dance” — and may have had some benefit for the country as a whole by ultra-highlighting how crucial it is to resolve the debt crisis long-term — exactly the result Bernanke is calling for. Now that this skirmish is over, we can settle down and find some answers. But that is not going to happen easily until the politicos in both parties zip their partisan lips and stop calling the other side unflattering names in a transparent effort to collect electoral votes in 2012. That includes POTUS himself.
@Wolverine, no, not conservative Republicans. John Boenher is a conservative Republican. There are plenty of conservative Republicans who are not fiscally irresponsible.
I was referring to those who did not care if the country went into default. I would include Ms. Bachmann in that group.
I don’t entertain this ‘other side’ stuff. It is not productive. The debt ceiling needed to be raised for the country to conduct business. It should have never been held hostage. I will not ever change my opinion on this.
“Our K-12 educational system, despite considerable strengths, poorly serves a substantial portion of our population”
Why does that kick teachers in the gut? I don’t think it does at all. Teachers are generally not policy makers.
How about the kid who isn’t going to college and who needs to get high school training for a job, say in leiu of an apprenticeship? How many high schools offer useful vocational training? Very few. Our educational system in this country defaults to those going to college as the final goal. How unrealistic.
Nowhere did Bernanke say teachers were the cause. That’s one reason that real decision-making needs to be returned more locally (read: KILL NCLB) because localities better know the needs of their population. That is not to say that there couldn’t be guidance and help with future needs at the federal level. That would be helpful also. But a farm community in Nebraska might need more autobody and tractor repair and less Shakespeare.
But thanks for caring about teachers, even if the comment was politically motivated. They would probably also like their right to a pension confirmed a little bit more than worrying about their guts though.
Perhaps, just perhaps, there is too much reading between the lines. Let’s work on face value for just a bit.
Here’s what I heard: “I’m going to do QE3, I just can’t have it look like I’ve already decided to do QE3. (Distract, talk about failed education system). Rest assured, I will engage in QE3. (Obfuscate, talk about the debt ceiling debacle). Finally, I’m going to do QE3. Thank you very much.”
I think you got the last part wrong. I think it said F-you very much.
Works for me.
MH, see above.
Now, another way of looking at Bernanke’s speech was that it was like any other politician’s speech… Very broad, open to interpretation and slim on details.
Except he isn’t a politician. He is an economist and has a bi-partisan job to do.
He’s a political appointee that needs to push his bosses agenda. Watch for an administration jobs program and sub-prime mortgage refinance program to hit after Labor Day.
I think Krugman might get some satisfaction in the near-mid term. Especially if poll numbers keep dropping. 😉
Not the typical political appointee. Where did he come from? Hmmmm…George Bush. Do you think Bernanke is going to do a quick makeover or something?
How about Greenspan? How many masters did he serve?
Hopefully any fed chair would advise congress and the president. They are supposedly experts in their field.
Damn the hypocrisy and full speed ahead. Someone recently pointed out to me a report from 27 July 2011 by Jack Cafferty of CNN. It seems that General Electric is planning to move its 115-year-old x-ray division from Waukesha, Wisconsin, to China. They will invest $2 billion in China, train more than 65 engineers, and build six research centers. GE is the same company that made $5.1 billion last year, paid no U.S. taxes, and now employs more people overseas than in the U.S. Oh, but the 150 employees in Wisconsin will not lose their jobs or be transferred — with the exception of some operating executives. Well, gee whiz, General Electric, thanks a whole bunch for small favors!!
The capper on this POS news is that GE CEO Jeffrey Immelt, a self-described Republican who has turned out to be a strong supporter of the current POTUS, is slated to be in charge of Pres. Obama’s new Council on Jobs and Competition — i.e. the “jobs czar.”
We as a people have gone collectively and completely nuts if we continue to let this kind of thing slip by. Where do we store the torches and pitchforks?
Strange world. Not long ago, Greenspan did a rather shocking mea culpa in front of a Congressional committee, admitting that he had been frequently very wrong on many things during his span of service. I saw the video. I swear it sort of looked like an inmate making a confession in front of the parole board.
It was a hard lesson that Greespan learned. He admitted that he always trusted the “free market” because he assumed people would act in their best interest as opposed to behaving like greedy slugs, which, by the way, is EXACLTY what happened.
A Forbes article on Bernanke and Congress: http://www.forbes.com/sites/joanlappin/2011/08/28/tired-of-being-the-g-o-p-s-pinata-bernanke-finally-lashed-back-at-congress/