Federal Reserve Chairman Ben Bernenke is probably not a very popular guy at the White House this morning. Bernenke is appearing before several Congressional committees this week, and it appears that his message differs wildly from what the Obama re-election campaign wants to put in its TV ads.
In a nutshell Bernenke admits that we are in a double-dip recession. Job growth, consumer spending and manufacturing are all well below expected levels--and the outlook gives no indication that those trends are going to change. Needless to say, Bernenke will not be accused of being a lapdog or a cheerleader for the President.
What's more, the Fed Chair is providing the hardcore fiscal conservatives with ammunition for their attacks on the President--as he said deficit reduction must be a priority of Congress. That sound you heard yesterday morning was those trying to de-fund or repeal "ObamaCare" jumping and whooping for joy. Although, I would caution Republicans from embracing Bernenke's "wisdom" too tightly. Remember, it was his fiscal policy--and that of his predecessor, Alan Greenspan--that got us into this mess.
Years of artificially low interest rates encouraged consumers to take on more and more debt--while eschewing saving money. And all of that debt became the new hot commodity--packaged as debt derivatives--that led to the banking crisis. Those rows of McMansions with the For Sale or Foreclosed signs in front of them? That is the Greenspan/Bernenke legacy.
And what's more, Bernenke gave conflicting advice on how to fix the problem. He tell Congress to cut deficits--but then says raising taxes and cutting federal spending will just lead to a deeper recession. So what option does that give lawmakers?
Just once, I'd like to see the Fed say that it is time to take our nasty-tasting medicine. All of us in the Middle Class need to get back in black--so that we can actually afford to once again become the engine that can get the economy out of the ditch. And those in Washington and state capitols need to stop piling more debt on us more and more giant entitlement programs.