Make us your home page
Instagram

Fed chief Bernanke says it's too soon to end stimulus programs

Federal Reserve Chairman Ben Bernanke gave a nod to renewing former President George W. Bush’s soon-expiring tax cuts.

Getty Images

Federal Reserve Chairman Ben Bernanke gave a nod to renewing former President George W. Bush’s soon-expiring tax cuts.

WASHINGTON — Federal Reserve Chairman Ben Bernanke told Congress on Thursday that the fragile economy needs government stimulus spending to strengthen the recovery and help reduce unemployment.

Testifying before the House Financial Services Committee, Bernanke urged lawmakers to come up with a credible plan to reduce the government's record-high budget deficits in the long run. But he said they shouldn't move now to slash spending or boost taxes in the near future.

"I believe we should maintain our stimulus in the short term," Bernanke said as he spoke about the economy's challenges for the second straight day on Capitol Hill.

Bernanke again said the Fed is prepared to take new steps to bolster the recovery if needed.

"We are ready, and we will act" if the economy doesn't continue to improve, Bernanke told the House panel.

Bernanke is under pressure to keep the recovery going because there's little appetite in Congress to provide a major new stimulus package.

The Fed chief made his comments as the panel's highest-ranking Republican, Rep. Spencer Bachus of Alabama, and other Republican members complained about the effectiveness of President Barack Obama's $862 billion stimulus package. That has increased government spending and cut taxes at a time when most Republicans and some Democrats are worried about the government's exploding red ink.

"The economic recovery is anemic at best," Bachus said, arguing that the stimulus package hasn't delivered.

Bernanke also gave a nod to renewing tax cuts by former President George W. Bush, which are set to expire at the end of this year.

"In the short term, I would believe that we ought to maintain a reasonable degree of fiscal support — stimulus — for the economy. There are many ways to do that. This is one way," he said.

The economy is slowing as consumers cut back spending under the strains of 9.5 percent unemployment, lackluster wage gains, sagging home values and chipped nest eggs.

If the recovery were to flash serious signs of backsliding, the Fed could revive programs to buy mortgage securities or government debt. It could cut to zero the interest rate paid to banks on money left at the Fed, although there are some technical difficulties raised by such a move, Bernanke said. The Fed also could create a new program to spark more lending to businesses and consumers in a bid to lure them to ratchet up spending and grow the economy.

Rep. David Scott, D-Ga., complained about a lack of "aggressiveness" on the part of the Fed to tackle high unemployment. And Rep. Gary Peters, D-Mich., wondered why the Fed wasn't taking new steps to stimulate the economy now.

Despite growing threats to the recovery, Bernanke said the Fed continues to believe the economy will grow modestly this year and avoid sliding back into recession. Some disappointing economic data hasn't been bad enough for Fed policymakers to "radically change our outlook," he said.

Fed chief Bernanke says it's too soon to end stimulus programs 07/22/10 [Last modified: Thursday, July 22, 2010 10:41pm]
Photo reprints | Article reprints

Copyright: For copyright information, please check with the distributor of this item, Associated Press.
    

Join the discussion: Click to view comments, add yours

Loading...
  1. Pinellas construction licensing board needs to be fixed. But how?

    Local Government

    LARGO –– Everyone agrees that the Pinellas County Construction Licensing Board needs to be reformed. But no one agrees on how to do it.

    Rodney Fischer, former executive director of the Pinellas County Construction Licensing Board Rodney, at a February meeting. His management of the agency was criticized by an inspector general's report. [SCOTT KEELER   |   Times]

  2. New owners take over downtown St. Petersburg's Hofbräuhaus

    Retail

    ST. PETERSBURG — The downtown German beer-hall Hofbräuhaus St. Petersburg has been bought by a partnership led by former Checkers Drive-In Restaurants president Keith Sirois.

    The Hofbrauhaus, St. Petersburg, located in the former historic Tramor Cafeteria, St. Petersburg, is under new ownership.
[SCOTT KEELER  |  TIMES]

  3. Boho Hunter will target fashions in Hyde Park

    Business

    Boho Hunter, a boutique based in Miami's Wynwood District, will expand into Tampa with its very first franchise.

    Palma Canaria bags will be among the featured items at Boho Hunter when it opens in October. Photo courtesy of Boho Hunter.
  4. Gallery now bringing useful art to Hyde Park customers

    Business

    HYDE PARK — In 1998, Mike and Sue Shapiro opened a gallery in St. Petersburg along Central Ave., with a majority of the space dedicated to Sue's clay studio.

     As Sue Shapiro continued to work on her pottery in St. Petersburg, her retail space grew and her studio shrunk. Now Shapiro's is bringing wares like these to Hyde Park Village. Photo courtesy of Shapiro's.
  5. Appointments at Raymond James Bank and Saint Leo University highlight this week's Tampa Bay business Movers & Shakers

    Business

    Banking

    Raymond James Bank has hired Grace Jackson to serve as executive vice president and chief operating officer. Jackson will oversee all of Raymond James Bank's operational business elements, risk management and strategic planning functions. Kackson joins Raymond James Bank after senior …

    Raymond James Bank has hired Grace Jackson to serve as executive vice president and chief operating officer. [Company handout]