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U.S. Federal Reserve Chairman Ben Bernanke testifies before the Senate Banking, Housing and Urban Affairs Committee hearing on Capitol Hill in Washington July 17, 2012. Bernanke said on Tuesday that the process for setting the Libor benchmark internationa
Federal Reserve Chairman Ben Bernanke
Federal Reserve chair Ben Bernanke is over austerity and, in typical Fed speak, did his best to convince the members of the Joint Economic Committee of Congress that just maybe their efforts would be better focused on creating jobs than crafting for more deficit-cutting policies.
"The loss of output and earnings associated with high unemployment ... reduces government revenues and increases spending on income-support programs, thereby leading to larger budget deficits and higher levels of public debt than would otherwise occur," Bernanke said. [...]

As he has done repeatedly in the past couple of years, Bernanke again bemoaned the government's austerity obsession on Wednesday, including this year's payroll-tax increase and the brutal budget cuts of sequestration.  Bernanke suggested that the government could replace some of this foolishness with longer-term fixes to Social Security and Medicare. A "Grand Bargain" on the deficit that does away with some short-term austerity might help the economy, Bernanke added.

So we can't be giving too much credit to Bernanke, throwing in that need to impose long-term "fixes" to Social Security and Medicare, a la the Grand Bargain just as long as it saves us from short-term austerity. But the core of the problem is austerity and that there's no way the Fed's target goals of 6.5 percent unemployment (we're well above) and 2 percent inflation (we're well below) can be met any time soon unless the government starts pumping some money into the economy again.

Originally posted to Joan McCarter on Wed May 22, 2013 at 12:37 PM PDT.

Also republished by Daily Kos.

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Comment Preferences

  •  It's not economics, it's ideology (30+ / 0-)

    That is what austerity is all about.  A hatred of the federal government that might have made John C. Calhoun (a one-time Whig) uneasy.  And a desire to wreck the economy so people would blame Obama and put the right into power.

    "We have always known that heedless self-interest was bad morals, now we know that it is bad economics." Franklin Delano Roosevelt, Jan. 20, 1937

    by Navy Vet Terp on Wed May 22, 2013 at 12:41:48 PM PDT

    •  If Romney had won the election, (17+ / 0-)

      The Republican house would have passed a huge unfunded "stimulus" plan (ie:increased defense spending and lower taxes) to help the economy.

      "We must hang together,...else, we shall most assuredly hang separately."

      by GreatDane on Wed May 22, 2013 at 12:45:05 PM PDT

      [ Parent ]

      •  All "stimulus" must be unfunded....otherwise (1+ / 0-)
        Recommended by:
        Milk River Madmen

        it wouldn't be stimulative.  If GDP = Govt spending + Private spending + Net exports => If you increase Govt spending by $100 billion but "pay" for it by raising taxes by $100 billion then besides for some small multiplier differences.....from a fiscal POV you have done nothing.....GDP would have stayed the same.  Raising taxes is just as much austerity as is cutting Govt spending

        "The Earth is my country and Science my religion" Christiaan Huygens

        by Auburn Parks on Thu May 23, 2013 at 06:06:54 AM PDT

        [ Parent ]

    •  Not entirely (7+ / 0-)

      Sure, there's ideology and politics, but there's also entities who believe that austerity serves their interests more than stimulus. E.g. rich people and big corporations who want their taxes cut or at least not raised. Also, racists who believe that too much money goes to "lazy" minorities.

      Calhoun may have been a crazy racist idologue, but he was also in favor of government spending on infrastructure, having been a Hamiltonian and champion of the "American System". I don't know much about the details, but I believe that there were economic issues as well at play in that whole "states rights" movement he led, having to do with the south's agrarian economy vs. the north's industrial economy, tariffs, etc.

      Time to do some reading...

      "Liberty without virtue would be no blessing to us" - Benjamin Rush, 1777

      by kovie on Wed May 22, 2013 at 01:20:17 PM PDT

      [ Parent ]

      •  Good points (2+ / 0-)
        Recommended by:
        DSPS owl, kovie

        The champions of austerity are typically the wealthiest 1% who want more power, control, and wealth. Austerity measures, coupled with other legislative moves like discouraging foreign workers from citizenship, will ultimately help to drive down wages, thereby creating more profits at the top.

        Their ideal is something out of "The Jungle"...no unions, no labor laws, dispensable workers that are so desperate for any source of income that they will do whatever is necessary for whatever minimal wage they can get.

        The rest are either people who are currently receiving (or planning to receive) benefits and don't want others to take what they have so they exclude expansion/spending more to cover more people; many of which are also racists.  Either way, they are just political pawns that don't realize that they are fighting for the enemy and often against their own best interests.

        My argument for Austerians, especially with the racist Tea Party-types, is that we should cut federal spending at the state level so that each state receives $1 in Federal benefits for every $1 in Federal Taxes they contribute.  Seems fair right? That's how a household budget works - you can't spend what you don't earn...so why not the federal government as well?

        It's amazing how many people in Alabama, Mississippi, and other red states love this idea, even though they are in states that are receiving far more in federal spending than they contribute in taxes. Either they don't receive any Federal benefits, so they are not impacted at all. Or, they sincerely believe that its states like NY and CA that are the welfare states and nothing but takers; meanwhile it would largely be the red states that would suffer the most. Fools.

        http://www.economist.com/...

        •  Even people who don't receive benefits (0+ / 0-)

          benefit from them, via the stimulative effect of those who do. There is no good economic argument for austerity or against stimulus. They're all based on old testament moralism, racist spite, or self-interest, be it financial or political.

          These people want to drag us back to the middle ages.

          "Liberty without virtue would be no blessing to us" - Benjamin Rush, 1777

          by kovie on Wed May 22, 2013 at 09:19:06 PM PDT

          [ Parent ]

        •  I'm sorry but the Federal Govt is in no way (2+ / 0-)
          Recommended by:
          Milk River Madmen, mad cat

          like a household or business.  The Govt is the ISSUER of the the US dollar.....we are USERS of the currency.  The Federal Govt doesn't have to "get money" from anywhere to credit bank accounts like we would have to.  Every time someone on the left uses the false household budget analogy, we make the deficit terrorists on the Right and left' arguments for them.  The Federal Govt adds money to the private economy through its deficit....its called national accounting.

          "The Earth is my country and Science my religion" Christiaan Huygens

          by Auburn Parks on Thu May 23, 2013 at 06:10:04 AM PDT

          [ Parent ]

          •  I know that the gov't is budget is different (0+ / 0-)

            but to the ignorant Tea Partiers who believe that it is, you have to frame the argument in a way they'll understand.

            The household budget argument is how they believe government spending ought to be; so, let's give them what they want.

            Generally speaking, the average person who clamors for austerity measures and is fearful of the debt, in fact wants austerity measures "for other people" and not themselves.

            Typically, they believe that the government spending that they benefit from is in some way better and worth protecting, as opposed to the "other" people that benefit from spending. (Not unlike Tea Party groups who feel entitled to a fast application approval by the IRS).

            So, the 1:1 ratio for federal spending:federal taxes largely impacts the people who are calling for austerity, while benefitting the areas that  wants more stimulus and are already paying out more than they receive in Federal tax dollars.

    •  Half right, don't forget that Obama is (1+ / 0-)
      Recommended by:
      Stude Dude

      Chicago School.

      That, in its essence, is fascism--ownership of government by an individual, by a group, or by any other controlling private power. -- Franklin D. Roosevelt --

      by enhydra lutris on Wed May 22, 2013 at 05:30:56 PM PDT

      [ Parent ]

      •  And Obama wanted a much bigger stimulus ... (2+ / 0-)
        Recommended by:
        METAL TREK, TRPChicago

        Politics - unfortunately - is the art of the possible.  And when you are dealing with "modern" Republicans, what is possible becomes much diminished, as compared to when we had Republicans who actually felt that a functional government was a good thing.

        •  Obama has repeatedly told the Big Lie over and (1+ / 0-)
          Recommended by:
          enhydra lutris

          over again about the Federal Govt "running out of money" or the Govt needing to "tighten its belt just like average americans."  The Federal Govt is where the US dollar comes from.  If the Govt never created any dollars, they wouldn't exist.  The US dollar is not a commodity that you mine, grow, or harvest.....the US dollar is a simple public monopoly or utility.

          "The Earth is my country and Science my religion" Christiaan Huygens

          by Auburn Parks on Thu May 23, 2013 at 06:11:58 AM PDT

          [ Parent ]

  •  So, Bernanke wants LT rising inequality in... (5+ / 0-)

    ..exchange for a ST stimulus?

    No Thanks.

    Between that and the status quo, the median worker is better off with the status quo.

    Learn about Centrist Economics, learn about Robert Rubin's Hamilton Project. www.hamiltonproject.org

    by PatriciaVa on Wed May 22, 2013 at 12:49:35 PM PDT

  •  I.e. monetary policy has reached its limits (1+ / 0-)
    Recommended by:
    Icicle68

    And we need more fiscal policy to fix this broken economy--and lots of it.

    I'll give him a pass on the "long term fixes" part since some of these programs do need long term fixes, to make them more progressive and generous. And I wouldn't be surprised if that's not what he meant, at least in part. It would be a form of long-term stimulus, as well.

    "Liberty without virtue would be no blessing to us" - Benjamin Rush, 1777

    by kovie on Wed May 22, 2013 at 01:14:45 PM PDT

  •  Congress? (3+ / 0-)
    Recommended by:
    rat racer, 714day, vigilant meerkat

    Austerity policy is coming straight from the top.


    "Justice is a commodity"

    by joanneleon on Wed May 22, 2013 at 01:16:52 PM PDT

    •  Yeah, the Koch Brothers, the billionaires, (1+ / 0-)
      Recommended by:
      FiredUpInCA

      and Citizens United unlimited Republican corruption. THAT's the REAL top where all the fucking austerity nonsense is coming from.

      -4.75, -5.33 Cheney 10/05/04: "I have not suggested there is a connection between Iraq and 9/11."

      by sunbro on Wed May 22, 2013 at 07:00:07 PM PDT

      [ Parent ]

      •  and the propagandists at Fox NEWS and elsewhere. (2+ / 0-)
        Recommended by:
        Stude Dude, FiredUpInCA

        Rupert Murdoch, Roger Ailes, the Weekly Standard, Right-Wing Talk Radio, The Tea Party, The Rupert Journal, etc. That's where they teach austerity to the dumb masses every day, and they should go fuck themselves.

        -4.75, -5.33 Cheney 10/05/04: "I have not suggested there is a connection between Iraq and 9/11."

        by sunbro on Wed May 22, 2013 at 07:03:58 PM PDT

        [ Parent ]

    •  Obama did not want to reduce SS (3+ / 0-)
      Recommended by:
      VinnieSaltine, Denver11, METAL TREK

      or Medicare any more than Reagan wanted to reduce American Nuclear missiles in SALT talks with the Russians back in the 80's. If Reagan offers something to the Russians, he expected something in return...tit for tat...and that's just exactly what President Obama has attempted to do.....Negotiate with the hard-ass, always-say-no Republican Congress. Most of the American People can see who has been the Adult in the Room, and it ain't the Republicans.

      -4.75, -5.33 Cheney 10/05/04: "I have not suggested there is a connection between Iraq and 9/11."

      by sunbro on Wed May 22, 2013 at 07:14:54 PM PDT

      [ Parent ]

      •  And given the R proclivity to NOT negotiate (2+ / 0-)
        Recommended by:
        sunbro, mad cat

        We have NOT had to move to Chained CPI or additional means testing for Medicare.

        So Rs, in their infinite idiocity, have snatched their own defeat from the jaws of victory.  Long live the Tea Bagging wing of the R Party.

  •  Democrats & Repugs Don't Want More Jobs (5+ / 0-)

    because American workers demand too much in pay. Both parties support shipping jobs overseas so there's really no way out of this unemployment situation.

    "The problem with posting quotes off the Internet is you never know if they're genuine."--Gen. George Washington at the Battle of Gettysburg, February 30, 1908

    by Aspe4 on Wed May 22, 2013 at 01:18:52 PM PDT

  •  Like this little mealy-mouthed comment.... (1+ / 0-)
    Recommended by:
    CharlesInCharge

    ...is going to have any effect on anyone.

    Maybe he felt he had to say something and now he's crossing that off his to-do list.

    What would Mothra do?

    by dov12348 on Wed May 22, 2013 at 01:21:18 PM PDT

    •  Yeah, one does get that 'closing the barn (0+ / 0-)

      door after the horses have gotten out' feeling from the little shithead.

      He's pathetic and he needs to go.

      The time for speaking up for more stimulus was back in, oh, February 2009 (when Krugman and Stiglitz did). Now, it just seems like empty posturing.

  •  Gosh, you're right. (1+ / 0-)
    Recommended by:
    renzo capetti

    More money to military contractors in Afghanistan, a good chunk borrowed from China, so more Americans can die over there for our profits!

    I mean "freedom." Yeah. Freedom. /military-industrial complex

    Sigh..........

  •  I'm with you here... (1+ / 0-)
    Recommended by:
    renzo capetti
    So we can't be giving too much credit to Bernanke
  •  i wish paul krugman were/alive.. (1+ / 0-)
    Recommended by:
    Beelzebud

    Monsanto is poison,gotta be stopped. Can't afford rich people anymore;must cut back. People like Dick Cheney are evil, don't belong in government. We need @ 9 different revolutions in this country, and may they all crossoverlap soon..

    by renzo capetti on Wed May 22, 2013 at 02:44:22 PM PDT

  •  The incoherence (2+ / 0-)
    Recommended by:
    FiredUpInCA, vigilant meerkat

    makes me laugh.

    Enough with the austerity!
    Stop fixating on austerity!
    Enough! Enough!. Please!

    Just cut Social Security and Medicare and....

    All austerity fetishism feeds the endless austerity fetishism.
    There are no flavors that are exempt from feeding the rest of the beast.

    Until you say "No" to all of it, the fever will continue.

    Pete Peterson will not stop until Social Security doesn't exist anymore. That is the goal. That is the plan.

    I am a Loco-Foco. I am from the Elizabeth Warren wing of the Democratic Party.

    by LeftHandedMan on Wed May 22, 2013 at 06:57:42 PM PDT

    •  This could have been the dawn (1+ / 0-)
      Recommended by:
      Stude Dude

      of a generation of Democratic Party dominance, if Democrats would stop kneecapping themselves with ideas dreamed up by people who don't care if a Democrat ever wins another election again.

      Nobody is going to reward you for cutting their Social Security, and young people don't want you to cut the social safety net. They understand they will get old too.

      I'm sorry the 1970's that only happened in Michael Kinsley's head scare so many so much.

      The real 1970's, as flawed as they were, and the version of the 1970's that never stops terrorizing certain Democrats, often the ones who wish it could stay 1993-1998 forever, were not the same thing.

      Lee Atwater was not a role model, he was a Republican thug/class assassin hired to kill the poor with dreams of being the new middle class.

      I am a Loco-Foco. I am from the Elizabeth Warren wing of the Democratic Party.

      by LeftHandedMan on Wed May 22, 2013 at 07:03:43 PM PDT

      [ Parent ]

  •  Medicare has already made a fix, (0+ / 0-)

    beginning in July.

    They're expanding competitive bidding and if you opt out of their approved suppliers, you or your insurance will pick up the difference.

    http://www.medicare.gov/...

    "The human eye is a wonderful device. With a little effort, it can fail to see even the most glaring injustice." Richard K. Morgan

    by sceptical observer on Wed May 22, 2013 at 06:58:02 PM PDT

  •  Bernanke's been saying this to Congress all along. (3+ / 0-)
    Recommended by:
    shrike, Denver11, offgrid

    In addition to running the loosest monetary policy in American history for four years, he's also been preaching the gospel of fiscal stimulus pretty much every time he's spoken to Congress.

    The guy has been Helicopter Ben, and I wish the Congressional Republicans would listen to him.

    Art is the handmaid of human good.

    by joe from Lowell on Wed May 22, 2013 at 06:59:42 PM PDT

  •  Sea Change (2+ / 0-)
    Recommended by:
    Denver11, METAL TREK

    Ya'll, the world has changed.    The low-skill jobs that people used to have are gone.   This high unemployment is here because there are not the jobs.  There are many skilled jobs going wanting right now in the USA.  But, they require skills that people don't have.  It sucks, and we as a society need to create jobs for people who otherwise are left behind by market forces.

     I personally would like to see a solar energy program akin to the Interstate Highway program.  Installing solar arrays is labor intensive and would provide a ton of work.  Likewise, gov't sponsored weatherization would create jobs.

    The private sector doesn't need all the people who need work.  Machines weld, assemble, sort, and soon will drive much better than humans.  

    Meanwhile, we keep pissing borrowed money down a rathole in an ineffective attempt to create jobs.  There is a reason that unemployment is stubbornly high.  

    •  Good points. (1+ / 0-)
      Recommended by:
      METAL TREK

      We need to have more mid-tech and low-tech not exportable jobs that return value to the ecosystem, and the two industries you cite (solar and weatherization) are great examples.  Jobs that pay decent, that reduce unemployment, that raise the tax base, and all the while reducing our carbon dependency.  Not a bad Superfecta.

      •  While I agree with everything you guys say (1+ / 0-)
        Recommended by:
        Milk River Madmen

        The problem is the false belief that the federal Govt, just like a household or business, must "get the money" in order to have the money to invest in your great solar construction plan.  The Federal Govt has no need to increase taxes in order to "get the money" to invest in infrastructure, The US Dollar comes from the Govt.  People don't want to pay more in taxes in order to do  major infrastructure program and I cant blame them, they are already making less ad less money over time relative to the cost of living increases.  The Govt needs to just create the money for infrastructure through deficit spending and then that would be hugely beneficial.

        "The Earth is my country and Science my religion" Christiaan Huygens

        by Auburn Parks on Thu May 23, 2013 at 06:19:36 AM PDT

        [ Parent ]

        •  Once upon a time I was in a 50% tax bracket (0+ / 0-)

          I wouldn't like it, but going there again wouldn't really be that distasteful

          •  yours is a minority political view and the reason (0+ / 0-)

            why Dems and progressives routinely lose the PR and election battles.  Americans will not accept taxation up to 40% of GDP like the social democratic nations of Europe...it will not happen.  And its totally unnecessary, since as I said, there is no restriction on the Govt ability to create money.

            "The Earth is my country and Science my religion" Christiaan Huygens

            by Auburn Parks on Fri May 24, 2013 at 03:13:42 PM PDT

            [ Parent ]

  •  In other words Bernanke like Obama and the (0+ / 0-)

    Republicans wants to screw over people with little or not income but pay government's huge give aways to the biggest corporations and banks.

  •  That first paragraph of the quote, did he (1+ / 0-)
    Recommended by:
    FiredUpInCA

    really need to explain that?  That's scary.  That's just basic math and should be obvious enough that it doesn't need to be explained.

    •  He's dumbing it down for his audience. (3+ / 0-)

      I once had a boss tell me, "When you write something for the Conservation Commission, you don't have to dumb it down at all. When you write for the Planning Board, you have to dumb it down a little. When you write for the City Council, you have to dumb it down a lot."

      Imagine how much you must have to dumb it down for Congress.

      Art is the handmaid of human good.

      by joe from Lowell on Wed May 22, 2013 at 07:15:54 PM PDT

      [ Parent ]

  •  yeah well screw u too ben (0+ / 0-)

    and the horse you rode in on.

    there is no reason at all to cut the big three.

    create jobs yes, tax high incomes yes, end the offshore tax havens yes,  cut our social safety net fuck no

    "The real wealth of a nation consists of the contributions of its people and nature." -- Rianne Eisler

    by noofsh on Wed May 22, 2013 at 07:33:09 PM PDT

  •  So what is he saying here? (0+ / 0-)
    Bernanke suggested that the government could replace some of this foolishness with longer-term fixes to Social Security and Medicare. A "Grand Bargain" on the deficit that does away with some short-term austerity might help the economy, Bernanke added.
    I'm so confused not. The deficit is as bogus as the Grand Bargain.  
  •  Bernanke obviously doesn't know much about (0+ / 0-)

    Economics.  If he did, he would know that "fixing" SS and Medicare would reduce the spending in the economy of the beneficiaries, and that's just long term austerity, not long term deficit reduction.  The less money beneficiaries have to spend, the fewer good and services they will purchase, and the fewer employees businesses will need to meet the reduced demand.  Not to mention that a lot of seniors will starve.  Duh!  What a putz.
    Krugman sums it up nicely: "My spending is your income.  Your spending is my income."  Thus, when the government reduces spending, our incomes go down (teachers get laid off, public servants pay gets reduced, etc)  When we reduce spending (because our income is down), the governments income (tax revenue) goes down, and THE DEFICIT IS NOT REDUCED!  

  •  bernanke (0+ / 0-)

    I think Bernanke has been really stellar. I really like it when he just shoots straight at these congressional hearings. You know, like a guy actually doing his job for once. Calling stupid people stupid.

    Also, a lot of people are jumping on him for talking about SS and Medicare cost reduction. You do know there are liberal ways to do that, right? He's not automatically suggesting draconian cuts.

  •  Your last line is the entire reason FOR it. (0+ / 0-)

    So Obama can have 8 years in office, and republicans can point to those economic indicators, and trumpet the nothing progress.

    Ayn is the bane! Take the Antidote To Ayn Rand and call your doctor in the morning: You have health insurance now! @floydbluealdus1

    by Floyd Blue on Thu May 23, 2013 at 05:29:00 AM PDT

  •  Long-term fix to SS and Medicare (0+ / 0-)

    That's easy. Chain SS limits to inflation and expand medicare to cover more people, which will help drive down healthcare costs.

    That should be the Democrats' proposal.

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