View Full Version : Bernanke To Dems: Put Your Fiscal House In Order

07-22-2012, 10:31 PM
After Fed chief Ben Bernanke patiently explained how lousy the economy is, Senate Democrats said he needs to do even more in the way of stimulus. That's like arsonists faulting a fireman for how he fights a fire. Following the 2008 crisis, the Fed slashed interest rates to zero and boosted its balance sheet a jaw-dropping $3 trillion to give the economy a boost. Say what you will, the last three years have without question marked the most stimulative policy followed by the U.S. Fed ever. And whether you believe it has worked or not, the Fed did something.

That's in stark contrast to Democrats in Congress. They blame Republicans for Democrats' own fiscal mistakes, while for three years failing even to produce a budget and now threatening to crash the economy with half a trillion dollars in ruinous tax hikes. The Obama administration is no better, issuing budget plans that don't even get Democratic support while, just this week, launching an attack on small businesses and vowing to hit entrepreneurs with higher taxes.

Is that why Bernanke used his semiannual Fed testimony Tuesday to chastise Congress and, by implication, President Obama for doing nothing about the nation's fiscal ills? Sure sounds that way. "The most effective way that the Congress could help to support the economy right now," he said, "would be to work to address the nation's fiscal challenges in a way that takes into account both the need for long-run sustainability and the fragility of the recovery." Fedspeak translation: Don't sit there, do something...

Yet, Senate Democrats want the Fed to do more. New York Sen. Chuck Schumer called the Fed "the only game in town" and told Bernanke, "get to work." Get to work? That's chutzpah on stilts. Congress has boosted spending from its long-term average of about 20% of GDP to close to 25%, while racking up $5 trillion in debt in just three years. Instead of cutting spending, rolling back regulations and slashing taxes historically, the only way out of a recession Democrats are pushing forward with tax hikes that Ernst & Young estimates will cost 710,000 jobs, slash $200 billion from GDP, lower wages by 1.8% and cause business investment to plunge.

If there's a silver lining in all this, it may be that Obama-crats have overplayed their hand. The way stocks rebounded Tuesday after selling off on Bernanke's glum testimony suggests the markets think Obama crossed the line recently with his outrageous attacks on entrepreneurs and small businesses. If so, he won't be re-elected, and Congress may revert to GOP control.

Editorial, Investor's Daily
July 18, 2012

07-22-2012, 10:34 PM
Me to Bernanke: "Sh'yeah, right!"