WASHINGTON (MNI) – The following is an excerpt from Federal Reserve
Chairman Ben Bernanke’s press conference Wednesday.
Question:
You said that you can’t cure all ills. That you haven’t
got strong enough tools to deal with the unemployment problem.
I was curious to know what policy actions you’d like to see
outside the fed to try to address this? And secondly, also on
the fiscal cliff the spending cuts and tax increases? How
concerned are you about that? And what ammunition do you have
to deal with that, if that becomes a problem?
Bernanke:
Well, there’s again a range of areas where actions could be taken
and I can’t proscribe all those responses. On the fiscal side, there
will be a increase in taxes and cut and spending on January 1st of the
coming year. CBO has suggested, if that’s allowed to take place that it
would cause unemployment to begin to rise and it might throw the economy
back into recession. So I think one very basic thing that could be done
to help address the recovery — the weaknesses in the recovery and the
need for more employment would be to address the fiscal cliff while
simultaneously addressing longer term fiscal sustainability issues which
remain, of course, very serious. So that’s one area where there’s a lot
of potential benefit. If the fiscal cliff isn’t addressed, as I’ve said,
I don’t think our tools are strong enough to offset the effects of a
major fiscal shock so we’d have to think about what to do in that
contingency. So I think it’s really important for the fiscal
policymakers to, you know, work together to try and find a solution for
that.
** MNI Washington Bureau: 202-371-2121 **
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