Bernanke faces sharp questions from GOP
The Fed chief is likely to get a grilling from Republican lawmakers about the costs and benefits of QE2.
By JEANNINE AVERSA, The Associated Press
Federal Reserve Chairman Ben Bernanke's first appearance before the House since Republicans took control last month is likely to be a tough one. And much of the grilling will probably come from members of his own party.
Bernanke is a Republican who served as President George W. Bush's chief economist. Bush chose him to run the Fed in 2006.
President Barack Obama ran into initial resistance in his effort to get Bernanke confirmed for a second term as chairman in late 2009. Republicans led the opposition, upset over the Fed's role in bailing out Wall Street firms during the financial crisis. In January 2010, the Senate confirmed Bernanke for a second term, though by the narrowest margin for any Fed chairman.
Many economists, academics and supporters in Congress credit Bernanke with helping prevent the Great Recession from turning into a second Great Depression.
But that's in the past. Bernanke's efforts to help invigorate the economy through a program to buy $600 billion in Treasury bonds have incited criticism.
Much of it has come from Republicans, including House Speaker John Boehner of Ohio and Senate Minority Leader Mitch McConnell of Kentucky. They've argued that the program could ignite inflation or cause speculative buying that might inflate bubbles in assets like stocks.
Bernanke is likely to face grilling from lawmakers about the costs and benefits of the program when he testifies to the House Budget Committee on Wednesday morning. The committee's chairman, Paul Ryan, R-Wis., has raised concerns about the Fed's efforts to stimulate the economy, including buying government debt. He, too, says he fears the Fed's actions could spur inflation.
Lawmakers from both parties will likely aim to get Bernanke to back their solutions for reducing the government's $1 trillion-plus budget deficits. Ryan has promoted budget cuts as the way to reduce deficits.
As in the past, Bernanke probably won't endorse a specific legislative approach for cutting the deficits. But he'll likely again warn Congress and the White House that failing to forge a plan to reduce deficits over the long term could hurt the economy later.
Persistent budget deficits will prompt investors to demand higher yields on government debt, causing interest rates to soar, Bernanke has said. Higher borrowing costs would crimp spending by consumers and businesses, slowing economic activity, he's warned.
Last week, Bernanke stepped into the political debate over the nation's debt limit. The Fed chief warned congressional Republicans not to "play around with" the Treasury Department's request to boost the government's borrowing authority beyond the current $14.3 trillion statutory cap. House Republicans have vowed to make deep spending cuts a precondition for voting to raise the debt ceiling.
The department has asked Congress to let it borrow more so it can continue to pay its bills. In the unlikely event that Congress denied the request, the U.S. government would be at risk of defaulting on its debt.
Bernanke, in remarks last week to the National Press Club, said the implications would be catastrophic. He urged Congress not to use the debt limit as a "bargaining chip" in broader discussions about reducing the government's deficits.
At the same time Bernanke is testifying, Rep. Ron Paul, R-Texas, will hold a hearing on whether the Fed's bond-buying program and record-low interest rates can really help create jobs.
Paul, a Bernanke critic who favors abolishing the Fed, says the "nation's employment picture remains bleak" despite the Fed's actions.
The unemployment rate has sunk in the past two months -- from 9.8 percent to 9 percent. But it remains very high by historical standards. And job creation is still weak. Bernanke has said it will take "several years" for unemployment to drop to normal levels.
© 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
You gotta love it ... Boehner finally has to do something real ... yet nowhere is there ever admission that the big repub idea when the tarps were put together ...tax breaks for big business ... were the complete WRONG idea, and that money should have gone to creating public project jobs as Obama wanted. Connect the dots ... 400 Billion in tax breaks, corporate cash levels at record levels 400 Billion higher ... Hmmmm ... and when they do spend the money, they buy back stock.
He's worried about inflation ? By classic definition, inflation is too much money chasing to few goods and services ... that does not seem to be the problem for the average median family ... and as fuel prices go up from higher oil prices, caused by still letting futures buyers in those markets who neither produce nor take delivery, disposable income is shrinking even further.
What really kills are the teabaggers who have no real clue on what the financial melt down was about, the magnitude ... and still say with a straight face that we don't know if all would have been just fine without the bailouts ... sheesh ... ignorant twits .. the only thing wrong with the bailouts was not charging many of those who caused the meltdown with gross negligence and handing hundreds if not thousands of jail sentences .. and taking back their $$ spoils ... bonuses .... forget it.
You are blinded by your partisan glass. This is not an issue of republican vs democrat. The really irresponsible one is the federal reserve and helicopter Ben. Printing money as if there is no tomorrow. Debasing the dollar, threatening the reserve status of it and therefore our future ability to borrow. Driving interest rate to zero that totally devastate the fixed incomers and retirees. Causing asset bubbles. Pop up the spiral commodity, energy and food price worldwide and therefore partially responsible for political unrest (yes, I know, he and his crooked student Krugman are blaming the weather. Maybe they will blame the alignment of stars next time).
The facts are clear: Federal Reserve is by and for the big banks and the politicians They never care about average hardworking families. For example, asking congress to raise the debt limit without any condition is no different from a teenager demanding great allowance without any consequences.
It is high time that average americans wake up to the enromous harm that the totally corrupted gangsters in Federal Reserves are doing.
BTW: I am not a teabagger nor republican.
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