Bernanke urges Congress to continue with stimulus
Panel told to not raise taxes, cut spending in near future
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.
But he refrained from repeating comments made earlier in the week, that he didn’t anticipate the Fed taking new action in the near term. Those comments to the Senate Banking Committee sent stocks tumbling Wednesday.
Bernanke is under pressure to keep the recovery going because there’s little appetite in Congress to provide a major new stimulus package.
Bernanke also gave a nod to renewing tax cuts by 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.
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.