“Chairman Bernanke is sounding the alarm that the Federal Reserve cannot save the economy on its own,” Schumer said in a statement Friday. “The ball is in Congress’ court to take steps to boost growth.”
Bernanke’s remarks came during an annual symposium of world economists held each year in Jackson Hole, Wyo. The event is held by the Federal Reserve Bank of Kansas City.
Though the Fed chief said he believed the nation’s long-term fiscal out look was strong, he scolded lawmakers for the tense, drawn-out, political standoffs that finally led to a deal to raise the nation’s borrowing limit. Bernanke said that “the country would be well served by a better process for making fiscal decisions.” And he suggested that more of that kind of brinksmanship could put the U.S. economy at severe risk.
“The negotiations that took place over the summer disrupted financial markets and probably the economy, as well, and similar events in the future could, over time, seriously jeopardize the willingness of investors around the world to hold U.S. financial assets or to make direct investments in job-creating U.S. businesses,” Bernanke said.
Bernanke’s chiding of Congress came weeks after Standard & Poor’s downgraded the U.S. credit rating, citing in part the agency’s “view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges.”
Whether the bipartisan 12-member “supercommittee” charged with tackling the country’s debt will work quickly and cohesively remains to be seen. But what is certain is that the ideological divide between the parties on economic policy is as wide as ever – and each side blames the other for dragging out the process.
House and Senate Republican leaders did not immediately respond to Bernanke’s remarks. But House Majority Leader Eric Cantor (R-Va.) argued in an op-ed in The Washington Post earlier this week that President Obama has been an “unwilling partner” in reining in the country’s spending and that the blame for the S&P downgrade rests on the shoulders of the president.
“Since taking office, he has added trillions to the debt, ignored the recommendations of his own fiscal commission and put forth a budget that failed to address the drivers of our debt,” Cantor wrote of Obama. “Then we had to drag him to the table to make even the modest spending cuts that Standard & Poor’s says don’t go far enough.”
Schumer argued Friday that “if you read between the lines of [Bernanke’s] remarks, it’s clear that Republicans are hurting the economy not only through their opposition to jobs-creating proposals, but also with their extreme tactics that have reduced confidence in Washington’s ability to solve problems.”
House Democrats, too, seized on the Fed chairman’s speech to hammer Republicans on unemployment.
“House Republicans have been in majority for 234 days, and have failed to offer or pass a single piece of legislation to create jobs – ignoring Americans’ top priority and join Democrats in growing our economy,” House Minority Leader Nancy Pelosi’s (D-Calif.) office said in a statement Friday.