Existing users please login

 

Home / Markets / Business Leaders

Bernanke Gives Nod to More Government Stimulus

 
FOXBusiness
     
    Bernanke 10-20-08

    Federal Reserve Chairman Ben Bernanke told House of Representatives members that the U.S. economy is expected to be “weak” for the foreseeable future and that Congress should consider a new economic stimulus package to help the ailing economy.

    This is the first time Bernanke has explicitly endorsed another economic stimulus package in public comments, though he said he would leave the exact nature and structure of any package up to Congress. 

    Congressional sources told FOX News that a new economic stimulus package would possibility consist of infrastructure improvements, extension of unemployment benefits and possibly a new tax credit.

    At the beginning of this year, Congress passed a $160 billion stimulus package that gave taxpayers a refund of up to $1,200 per family. Congressional leaders, including House Speaker Rep. Nancy Pelosi, D-Calif., have occasionally over the past few months suggested that a second such plan be enacted.

    Bernanke told members of the House Budget Committee on Monday that, “with the economy likely to be weak for several quarters, and with some risk of a protracted slowdown, consideration of a fiscal stimulus package by the Congress at this juncture seems appropriate."

    When asked by Congress what the package should consist of and when it should be deployed, Bernanke said the package's size should be "significant" but would not endorse any particular program and would leave that decision up to Congress. 

    The idea of infrastructure improvements has gained steam in recent months because it would help rebuild some of the deteriorating roads, rails and other parts of the capital system, while also providing jobs.

    Lending even more cachet to the proposal, the White House said Monday it would be "open" to the idea of a second stimulus package, depending on what is proposed by Congress.

    In his testimony, Bernanke said that the recent $700 billion bailout package should provide federal regulators the appropriate tools to deal with the economic crisis at hand.

    He endorsed the Treasury’s plan to purchase mortgage-backed securities from banks, as well as the Treasury’s plan to directly inject capital into the nation’s largest banks, saying it would “help restore trust in our financial system.”

    He did emphasize that “although there have been encouraging signs” since the plan was announced a week ago, “it is still too early to assess their full effects.”

    Also, Bernanke said restoring the faith in the markets is “an essential first step,” but “will not quickly eliminate the challenges still faced in the broader economy.”

    When asked by Rep. Rosa DeLauro, D-Conn., if the U.S. economy was in a recession, Bernanke said that the economy in a “serious” slowdown and "whether it's called a 'recession' or not is of no consequence."

     

    Fox Business Video