Fed Chairman Calls Deficit Reduction "Very Important"
Fed Chairman Calls Deficit Reduction "Very Important"
Bernanke Cites Baby Boom Retirees in Letter to Congressman Sherman
Federal Reserve Chairman Ben Bernanke told Congressman Brad Sherman that a wave of baby boom retirements increases the importance of shrinking the federal budget deficit. The new Fed chairman also asserted, contrary to claims by the Bush administration and so-called supply-side economists, that "tax cuts do not wholly pay for themselves."
"I am heartened." Sherman said, "by the chairman's honesty about soaring budget deficits and the reality check he provides on Bush administration fantasies about the budgetary impact of tax cuts for the wealthy."
"The Fed chairman is above politics and he can speak his mind," Sherman added. "He can tell us what we should already realize, and that is that we have to cut spending if we can, and cannot continue to cut taxes on those at the very top if we are going to get rid of this federal budget deficit."
Bernanke's statements came in a letter to Sherman, a member of the House Financial Services Committee. The letter elaborated on issues raised during testimony to the committee last February 15 during the new chairman's first appearance before Congress.
Sherman asked Bernanke, "Can we count on your leadership, as the new chairman of the Federal Reserve, to have as one of your top priorities the reduction of the nation's budget deficit?" Bernanke replied:" ...[R]educing the federal deficit is very important, especially in light of the need to prepare for the retirement of the baby-boom generation. I urge the Congress to proceed on that effort in a timely manner and to pay particular attention to how its decisions on spending and tax programs will affect the U.S. economy in the long run." He deferred to Congress regarding specific tax and spending programs.
Sherman also questioned Bernanke about tax policy. "I interpret your position to be that tax cuts do not pay for themselves, and that they do indeed reduce revenues," the congressman said. Bernanke said, "[U]nder normal conditions, tax cuts do not wholly pay for themselves."
http://www.house.gov/apps/list/press/ca27_sherman/pr_060419a.html