Ben Bernanke (Wikipedia Commons)
Heads up
Sen. Harry Reid and
President Obama: maybe you shouldn't be so keen on a "grand bargain" that
emphasizes deep cuts rather than revenues.
(Reuters) - U.S. Federal Reserve Chairman Ben Bernanke warned Congress on Thursday that overzealous cuts to government spending in the short term could derail an already fragile recovery and said a U.S. debt default may wreak financial havoc.
"I only ask ... as Congress looks at the timing and composition of its changes to the budget, that it does take into account that in the very near term the recovery is still rather fragile, and that sharp and excessive cuts in the very short term would be potentially damaging to that recovery," Bernanke told members of the Senate Banking Committee.
It's not the first time he's given that warning, but for some reason it's just not seeming to reach the powers that be. While failing to raise the debt ceiling, Bernanke said, would be a "calamitous outcome," that "would create a very severe financial shock that would have effects not only on the U.S. economy, but the global economy," cuts that are too deep too soon are the last solution negotiators should be looking for.