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Ben Bernanke testified recently on Capitol Hill, in what may have been his last appearance before Congress as chairman of the Federal Reserve. Basically, he said Congress is the problem.
Mr. Bernanke said the Fed is doing its part to stimulate the economy, and the private sector is doing its share, but the public sector is hemorrhaging jobs. The federal budget sequester — automatic, across-the-board cuts in government spending — has been a disaster for the recovery and the economy generally.
The Fed chairman said we need public spending, not cuts. By implication, he endorsed public works jobs — New Deal-style fiscal policy.
He said Congress should have “somewhat less restraint in the near term, and more action to make sure we’re on a sustainable path in the long run.” In Fed-speak, that’s fire-breathing language.
But he went even further: “The risks remain that tight federal fiscal policy will restrain economic growth over the next few quarters by more than we currently expect, or that the debate concerning other fiscal policy issues, such as the status of the debt ceiling, will evolve in a way that could hamper the recovery.”
Two years ago, Mr. Bernanke warned: “This very moment is not the time to radically reduce our spending or raise our taxes, because the economy is still in recovery mode and needs that support.” Congress did the opposite of what he advised, and cut spending.
As much as Mr. Obama, Mr. Bernanke has done much during his term to stabilize the economy. When Congress did harm, he applied medicine. He has been a competent chairman.
Mr. Bernanke is not right or left, angry or complacent. He thinks about what he does. It’s hard to fathom why President Obama seems to want him out.