US CongressWk: Bernanke Testimomy To Help Shape Fiscal Debate

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–Fed Chairman To Testify Friday At 9:30 AM On U.S. Economic Outlook
–112th Congress To Convene Wednesday; Boehner Becomes Speaker
–Hill Leaders Begin To Discuss How To Complete FY’11 Budget
–Obama Administration To Offer FY’12 Budget in Mid-February

By John Shaw

WASHINGTON (MNI) – As the 112th Congress is sworn in this week,
Federal Reserve Board Chairman Ben Bernanke will testify on the U.S.
economic outlook, helping frame the fiscal debate for the coming year.

The new Congress will convene Wednesday, with a Democratic majority
continuing in the Senate and a new Republican majority in the House.

Rep. John Boehner, a Republican, will become the new House Speaker.
Senate Majority Leader Harry Reid, a Democrat, will retain his position
as the Senate’s leader.

The first week of a new Congress is largely ceremonial. The House
and Senate will take up rules for each chamber on Wednesday.

Bernanke will testify Friday morning at 9:30 a.m. before the Senate
Budget Committee on the U.S. economy.

It seems likely that Budget panel members will ask Bernanke to
assess the strength of the U.S. recovery, with a particular focus on the
labor market. He will be testifying shortly after December’s employment
report has been released.

The Senate Budget Committee is also likely to press Bernanke to
explain the Fed’s aggressive monetary policy programs, with some asking
if they might cause inflationary pressures in the future.

Finally, the Fed chairman is likely to be asked when — and
how — lawmakers should begin to shift from a heavy focus on fiscal
stimulus to deficit reduction. In the past, Bernanke has said that it is
important to develop a long-term deficit reduction plan, but added that
policymakers should phase them in gradually after the economy picks up

The Congressional Budget Office will release its updated economic
and budget outlook later in January.

President Obama is set to release his fiscal year 2012 budget on
February 14.

Congress is still trying to complete work on the FY’11 budget.
Before adjourning in late December, Congress passed a stop-gap spending
bill that funds the government until March 4.

Republicans will try to cut the level of spending for the
FY11 spending bills below that which is in the current stop-gap bill.

None of the 12 regular spending bills were passed last year by
Congress for the fiscal year that began Oct. 1.

** Market News International Washington Bureau: 202-371-2121 **

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