• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • Bernanke Calls for Deficit Reduction

    Ben Bernanke made an important point while testifying before the House Budget Committee: lawmakers must reduce the federal deficit and return the nation to fiscal sustainability.

    The deficit, set to hit $1.8 trillion this year, is not expected to dip under $500 billion per year during the next decade, even under President Obama’s unusually optimistic economic forecast. Chairman Bernanke notes, “With the ratio of debt to GDP already elevated, we will not be able to continue borrowing indefinitely.” Put simply, the country is on a fiscally unsustainable path and action must be taken to avoid calamity.

    Let’s be clear, this is a spending problem not a revenue problem. Even if government revenue were magically reset to historical levels of 18.4 percent of GDP instead of the expected 15.4 percent we’d still be running a deficit of more than $1.3 trillion this year. The government put itself in this position through massive spending increases, and can only regain sustainability through substantial spending reductions.

    Unfortunately, short term stability isn’t the country’s only dilemma. The long-term financial situation is also on an unsustainable course due to uncontrolled entitlement programs. Chairman Bernanke affirms,

    Prompt attention to questions of fiscal sustainability is particularly critical because of the coming budgetary and economic challenges associated with the retirement of the baby-boom generation and continued increases in medical costs… Unless we demonstrate a strong commitment to fiscal sustainability in the longer term, we will have neither financial stability nor healthy economic growth.”

    Congress must take Chairman Bernanke’s counsel. Cut deficits in the short-term and reform entitlements for the long-term.

    Posted in Economics [slideshow_deploy]

    4 Responses to Bernanke Calls for Deficit Reduction

    1. Andrew, New York says:

      That should do it LOL or cry-ol

    2. Pingback: » Financial News Update - 06/03/09 NoisyRoom.net: “Extremism in the defense of liberty is no vice. Moderation in the face of tyranny is no virtue.” Barry Goldwater

    3. Jack Kinch(1uncle) says:

      May as well invite them. We are becoming like them. Terrible .

      we are the result of breeding a lot of dummies on welfare to vote demorat and dumbing down the schools to accommodate them.

    4. Hal, FL says:

      I don't get it. Surely he knew that this would be the result of all that money they've been printing at record speed and all that borrowing from themselves they've been doing. It's not rocket science.

      Take a look at the gold graph on the widget http://www.learcapital.com/exactprice and it's obvious for a while now that investors have recognized that FED's practices are leading to killing the dollar and major inflation. Gold is on the rise. People turn to it to protect their money with paper money is in crisis.

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.