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JOKUL VOLANT TOD

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U.S. Must Start to Rein In the Deficit, Fed Chief Says  

2010-04-14 22:27:32|  分类: 历史与文化 |  标签: |举报 |字号 订阅

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U.S. Must Start to Rein In the Deficit, Fed Chief Says - 雪山飞狐 - JOKUL VOLANT TOD

Kevin Lamarque/Reuters

Ben S. Bernanke testifies before the Joint Economic Committee in Washington on Wednesday.

By SEWELL CHAN

Published: April 14, 2010

WASHINGTON — The Federal Reserve chairman said Tuesday that the government must begin to make “difficult choices” to address its gaping deficits, and warned that “postponing them will only make them more difficult.”

The chairman, Ben S. Bernanke, said that a “credible plan” for reining in federal deficits could help long-term interest rates and raise consumer and business confidence. “Although sizable deficits are unavoidable in the near term, maintaining the confidence of the public and financial markets requires that policymakers move decisively to set the federal budget on a trajectory toward sustainable fiscal balance,” he said.

In prepared testimony to the Joint Economic Committee of Congress, Mr. Bernanke did not address monetary policy or say how long the Fed would keep short-term interest rates near zero.

He also did not specify whether he believed the government should raise taxes, make cuts to Social Security and other benefits programs, or do something else. But his admonitions could help give momentum to the bipartisan fiscal commission created by President Obama.

Despite “encouraging signs that layoffs are slowing and that employment has turned up,” Mr. Bernanke said it would take “a significant amount” to restore the 8.5 million jobs lost in the last two years. He expressed particular concern about the statistic that 44 percent of the unemployed in March had been jobless for at least six months.

Inflation, the other side of Mr. Bernanke’s mandate as Fed chairman, remains low. Personal consumption expenditures, the index of inflation the Fed uses the most, have been rising at an annual rate of 1.25 percent. Excluding the more volatile prices of food and energy, core inflation has slowed to annual rate of 0.5 percent. And long-term inflation expectations have been stable.

Mr. Bernanke said the economy had begun to recover in the second half of 2009, as companies worked down excess inventories and showed signs that they would start to expand production.

Since the middle of last year, consumer spending has been rising at a rate of about 2.5 percent a year, Mr. Bernanke said, noting the pickup in car sales in March as manufacturers offered a new round of incentives. Manufacturing in the eight months ending in February grew at an annual rate of 8 percent, in part because of stronger demand from foreign markets.

But Mr. Bernanke also described “significant restraints on the pace of the recovery.” Sales of new and existing homes fell in January and February, the pace of housing starts has stayed sluggish, and the commercial real estate market is still shrinking, he said. State and local governments, he added, have cut back on jobs and construction spending.

Mr. Bernanke said that banks and financial markets had recovered since the 2008 crisis, in part because of the Fed’s extraordinary lending programs and the “stress tests” that boosted investor confidence.

However, “despite their stronger financial positions, banks’ lending to both households and businesses has continued to fall,” a result of a sluggish demand for loans and a fall in credit-worthy borrowers, he said. He added that the Fed was trying to ensure that its bank supervision did not “inadvertently impede sound lending” and slow the recovery.

But it was in the area of fiscal policy — a realm where Mr. Bernanke has treaded lightly — that lawmakers are most likely to focus on.

The deficit, which this fiscal year will nearly reach the record of $1.4 trillion achieved in 2009, will begin to “recede somewhat” over the next two years as the stimulus winds down and the recovery brings in more revenue. But the deficit is expected to remain around 4 to 5 percent through 2020, under a projection by the Congressional Budget Office that Mr. Bernanke suggested was fairly rosy.

Under a more gloomy fiscal scenario — 60,000 American troops in overseas operations by 2015, discretionary spending growing at the rate of nominal gross domestic product, the extension of expiring tax cuts, and indexing the alternative minimum tax for inflation – the deficit could hit 9 percent of G.D.P. by the end of 2020.

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