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Posted on 07/14/2011 10:03:10 AM PDT by NormsRevenge
Federal Reserve Chairman Ben Bernanke warned Congress on Thursday that overzealous cuts to government spending could derail an already fragile recovery and said a U.S. debt default could wreak financial havoc.
"I only ask ... as Congress looks at the timing and composition of its changes to the budget, that it does take into account that in the very near term the recovery is still rather fragile, and that sharp and excessive cuts in the very short term would be potentially damaging to that recovery," Bernanke told members of the Senate Banking Committee.
Congress and the White House are stalemated in talks on cutting the budget deficit, with Republicans seeking $2.4 trillion in spending cuts in exchange for agreeing to raise the $14.3 U.S. government borrowing limit. The U.S. Treasury has said it will run out of money after August 2 to pay all of the country's bills if the a deal is not reached to raise the debt ceiling.
On the second day of delivering the Fed's semiannual monetary policy report to Congress, Bernanke renewed his warning that a U.S. debt default would be devastating for the U.S. and global economies.
"It would be a calamitous outcome," Bernanke said. "It would create a very severe financial shock that would have effects not only on the U.S. economy but the global economy."
Failure to raise the debt limit in time would constitute a "self-inflicted wound" to the economy, he added.
(Excerpt) Read more at finance.yahoo.com ...
Translation: I just want to keep this thing from exploding until after I leave my post, publish my memoirs, and move to Geneva, Switzerland. After that, I couldn’t care less.
” If they prioritize and make sure they are getting value for the dollars spent, “
Oh, they’ll prioritize all right — the priority will be whatever causes the most pain to the greatest number of people (seniors, veterans, military) for the least gain...
And blame it on the TEA Partiers....
I realize (sad face) Congress will cave, like they caved on the bailouts. But I do have this (pleasant) dream of waking up the morning of Aug 2nd no debt ceiling raised. And guess what the world did not stop spinning. : )
These Bernanke doomsayers are starting to remind me of those nuts that tell you every year on so and so date the world is coming to an end. And I wake up on that day, still here. : )
Ben Bernanke:
(February 15, 2006) “Housing markets are cooling a bit. Our expectation is that the decline in activity or the slowing in activity will be moderate, that house prices will probably continue to rise.”
(January 10, 2008) “The Federal Reserve is not currently forecasting a recession.”
(March 28, 2007) “At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained. In particular, mortgages to prime borrowers and fixed-rate mortgages to all classes of borrowers continue to perform well, with low rates of delinquency.”
(July, 2005) “We’ve never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don’t think it’s gonna drive the economy too far from its full employment path, though.”
(February 15, 2007) “Despite the ongoing adjustments in the housing sector, overall economic prospects for households remain good. Household finances appear generally solid, and delinquency rates on most types of consumer loans and residential mortgages remain low.”
(November 15, 2005) “With respect to their safety, derivatives, for the most part, are traded among very sophisticated financial institutions and individuals who have considerable incentive to understand them and to use them properly.”
(January 18, 2008) “[The U.S. economy] has a strong labor force, excellent productivity and technology, and a deep and liquid financial market that is in the process of repairing itself.”
(May 17, 2007) “All that said, given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system. The vast majority of mortgages, including even subprime mortgages, continue to perform well. Past gains in house prices have left most homeowners with significant amounts of home equity, and growth in jobs and incomes should help keep the financial obligations of most households manageable.”
“The GSEs are adequately capitalized. They are in no danger of failing.”
(Two months before Fannie Mae and Freddie Mac collapsed and were nationalized) “They will make it through the storm.”
“I don’t think that Chinese ownership of U.S. assets is so large as to put our country at risk economically.”
(June 10, 2008) “The risk that the economy has entered a substantial downturn appears to have diminished over the past month or so.”
...
So let me understand this:
Deep spending cuts are bad.
Not borrowing more money than we can afford to pay back is bad.
So the best course of action to maintain our credit rating and grow our economy is to keep borrowing until the rating agencies drop us to junk status.
Where do we find these idiots?
Idiot-fool!
Drop corporate income tax down to 15% and couple it with governmental spending cuts and you’ll see double-digit growth in this country...just for kicks, make CapGains rate at 15% for 2 yrs!
Be still my heart-if only someone was actually proposing such a thing.
Good grief, Ben. There are not CUTS. They are only reductions in the rate of growth even in the most ambitious proposals.
Idiot-fool!
Drop corporate income tax down to 15% and couple it with governmental spending cuts and you’ll see double-digit growth in this country...just for kicks, make CapGains rate at 15% for 2 yrs!
So we can spend ourselves into prosperity? All these years I’ve misunderstood the basics of economics. Hell, this is a great time to pull out all the stops and spend money like a drunken sailor (no offense to sober ones). If we do that we’ll have prosperity coming out the wazoo!
What recovery???? Hiring more Rats into worthless Government Jobs?? GOOD, I hope all that stops!
Bernanke is correct - a US debt default would be a disaster world wide
The US will not default on it's debt. We are Constitutionally mandated to pay our debt.
What we will have to do is make hard choices where and how the money we do have is spent.
I despise this Obama handmaiden. Imagine the chairman of the Federal Reserve advocating more spending, rather than spending cuts that would free up private capital.
Ben is what we call, “stark raving stupid”.
But Barry said that we had to rip the Band-Aid off
Which one is it?
Could it be that we are so far over the edge that the only way to delay the inevitable is to keep printing money?
I’ve said it before and I’ll say it again. Just rip the bandage off this sucking chest wound of an economy and let the healing begin! I’d like to be able to say I’ll be back to even in another decade. But, I’m just a dumb little chicken farmer from the Midwest. WhatthehelldoIknow?
Nothing is going to happen until we hit rock bottom. Well, in reality, we’ve already HIT rock bottom and Government keeps blasting and digging!
Grrrr!
Please tell me how some of these cuts would be damaging to the economy:
Presidential Campaign Fund: $775 million savings over ten years.
Eliminate Mohair Subsidies: $1 million annual savings.
Eliminate taxpayer subsidies to the United Nations Intergovernmental Panel on Climate Change: $12.5 million annual savings
Eliminate the National Organic Certification Cost-Share Program: $56.2 million annual savings.
Eliminate fund for Obamacare administrative costs: $900 million savings.
Cut in half funding for congressional printing and binding: $47 million annual savings
Trim Federal Vehicle Budget by 20%: $600 million annual savings
Cut Federal Travel Budget in Half: $7.5 billion annual savings
Eliminate duplicative education programs. H.R. 2274 (in last Congress), authored by Rep. McKeon, eliminates 68 at a savings of $1.3 billion annually.
U.S. Trade Development Agency:$55 million annual savings.
Woodrow Wilson Center Subsidy: $20 million annual savings.
John C. Stennis Center Subsidy: $430,000 annual savings.
Community Development Fund: $4.5 billion annual savings.
Heritage Area Grants and Statutory Aid: $24 million annual savings
These are just a small percentage of what is/should be on the table but - take a look at these expenses, most,if not all are pork to favorite causes or, expenses for our congress critters to function off of taxpayer monies.
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