Bernanke 'Supportive of Going Big'
Supporters of enacting a comprehensive deficit reduction plan got a boost yesterday from Federal Reserve Chairman Ben Bernanke. At a hearing with the House Budget Committee on the economic outlook, Bernanke responded to a question from Rep. Mike Simpson (R-ID) about the need for a large fiscal plan. He said the following (at the 58:45 mark of the video):
The $4 to $6 trillion, Congressman, was a number talked about for the next decade, and the idea was that achieving that would stabilize the debt-to-GDP ratio--maybe get some progress there--and I was supportive of going big, so to speak, when we--we, the country--were discussing those issues last summer. So, yes, I think a very substantial attack on the deficit is needed.
While the Fed Chairman as a point of practice does not endorse specific policies, it is encouraging to hear one of the high-ups in the economic world endorsing a large deficit reduction plan.
Bernanke also made some other very relevant points on a fiscal plan. He said that just focusing on a ten-year target number for deficit reduction plan is inadequate because it ignores the problems we face beyond that, with continually rising health care costs and a demographic shift. Thus, we also needed a plan that had an eye towards solving our long-term structural problems, not just making the ten-year numbers look good. In addition, by taking the long view, we can phase changes in gradually and give people time to adjust to them without worrying about just the ten-year budget impact (he gave the example of 1983 Social Security changes that are still phasing in).
Chairman Bernanke adds his name to the list of many prominent lawmakers and experts who support Going Big.