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  • Federal Reserve Chairman Ben Bernanke Highlights Unsustainable Debt

    Testifying before the House Budget Committee today, Federal Reserve Chairman Ben Bernanke noted:

    Even after economic and financial conditions have returned to normal, however, in the absence of further policy actions, the federal budget appears to be on an unsustainable path. A variety of projections that extrapolate current policies and make plausible assumptions about the future evolution of the economy show a structural budget gap that is both large relative to the size of the economy and increasing over time.

    Chairman Bernanke joins a large and growing chorus of voices from both left and right calling attention to the unfortunate truth that even after the recession is over, and the massive deficit spending in response to the downturn has ceased, the country will remain on an unsustainable fiscal course.

    Currently, if taxes were held at their historical average, spending on Social Security, Medicare and Medicaid alone would absorb all federal revenue by 2052. Making matters worse, these programs remain on auto-pilot and increase each year without any congressional action. This allows members of Congress to easily avoid making difficult decisions.

    Even allowing all of the Bush tax relief to expire and drastically increasing taxes to levels far above the historical average won’t solve this problem. Simply put, the nation is spending more than it can afford. Without significant restrictions on entitlement growth the nation will continue down this dangerous path.

    Chairman Bernanke is right, the federal budget is unsustainable. The time to face reality and reform entitlements is now.

    Posted in Economics [slideshow_deploy]

    9 Responses to Federal Reserve Chairman Ben Bernanke Highlights Unsustainable Debt

    1. West Texan says:

      Excellent work on the graphic. It's simply enough for Obama and company to grasp. Of course, nothing else seems to get their attention. Oh well, it was worth a try.

    2. Pingback: Ron Paul grills Ben Bernanke before House Financial Services (02/10/09) | Auto Loans | Best Credit | Finance

    3. John, NY says:

      "Chairman Bernanke is right, the federal budget is unsustainable. The time to face reality and reform entitlements is now."

      Mr. Bernanke is the reason we are on an unsustainable path. To be positive about the subject, however, I will say that it is at least good that he has finally admitted that it is going in the right direction. Constant printing and inflationary actions will result in drastic results for the U.S.

      If you'd like to see a good archive of articles pertaining to Mr. Bernanke's actions and how he has responded to much criticism pertaining to his actions with the Federal Reserve, take a look at http://www.thedailymiddle.com/category/ben-bernan

      John

    4. Wildcat from Dallast says:

      The fact that our federal spending has been place on a track to simply be unsustainable is a blinding glimpse of the obvious to the most casual observer! Even we common folk knew that in late January 2009 as the TARP was being implemented and more incorrectly named bills such as the “stimulus bill” were being crammed down the throats of the American citizens.

      In a brief review take a moment to actually assess the crux of the bills that came down from the sausage factory and you will find most were named one thing but ultimately were focused on unnecessary federal spending and enacting legislation to control your everyday life as well as attempting to build a firmer foundation to greatly increase the rolls of democrat voters focused on keeping democrats in power for the next 50+ years!

      We are at a time in our history where a large majority of our elected officials in the House & Senate need to take actions to NOT fund the wish list of the Progressives/Statists/Socialists/Liberals bent on ruining our country. Unfortunately I doubt that we have that many have the intestinal fortitude to do that.

      As a way to combat such tyranny from continuing I would like to invite your attention to a professionally prepared A/V presentation to focus the efforts of those of us who both pay taxes and vote to:
      http://www.youtube.com/watch?v=s0bh77k2Wdk and http://www.youtube.com/watchv=apQukuaXGs4&NR=….

      “America Rising” parts I & II are highly enjoyable (as well as motivational), unless you are a liberal, with a rapid fire text and pictures of specific liberal officials being targeted for replacement at every upcoming election. America Rising (part I) also has an impressive instrumental soundtrack so turn your speakers up.

    5. JAK Virginia says:

      President Obama and the Congress are aggressively spending this nation into bankruptcy and they continue to refuse to accept that fact, and even distort fiscal reality in order to perpetuate their personal social agendas dedicated to the economic and communal restructure of American society.

      We now face a faltering economy, growing revenue deficiencies, foreign policy failures, military setbacks in two wars, accelerating and overwhelming financial debt, declining stock prices and faltering new business investments, health care confusion and implementation delays, chaotic fossil fuel plans and environmental disasters, declining private sector job opportunities, and an ever increasing and intrusive role of government in our lives, all of which is negotiated and concealed by our elected officials during back room agreements, legislative ear marks, and even special favors for conformance with political policy, all of which is not disclosed or publically revealed.

      What choice is there for citizens other than to vote these losers out of office as soon as we can and replace them with citizens with honestly and dedication in order to restore the integrity and the viability of the American Constitution and our way of life.

    6. b & t flyover co says:

      Iran is important. The oil spill is important. The escalating unsustainable debt is important. Israel is important. Our sovereignty is important, our borders, too.

      But I gotta tell you — and if you think I have a bad attitude and am a less than "great" American, OK — you're entitled to your opinion just as I am entitled to mine.

      For me, it just all boils down to health care. I want it back. For all of us. I don't want to give up the health care benefits that came with my pension that I worked for my entire life. And I don't want it rationed. That's all I care about. I used to listen to talk radio and watch Fox — Sean, Greta, Glenn Beck — but nowadays if the show doesn't speak to me about us getting back our health care, I turn off the radio and TV.

      If it ain't about getting back our health care, I just plain don't care.

      Never thought I would be a one issue person, but that is exactly what I have become.

      Get back our health care or go away.

      Without it, we are all so screwed.

    7. Tom Scherer says:

      The greatest generation Tom Brokaw

      The greatest generation by Tom Brokaw, a misstatement for sure, they are truly the generation that looked out for their own interests at the expense of future generations.

      This generation that produced the baby boomers generation (1946-1964) are those born prior to 1945. They did things that in my mind have set the free country of USA into a debtor nation with no hope of prosperity.

      They set themselves up with extra retirement plans(social security) unfunded in retirement despite many working for companies for 30 years and collecting pensions. They currently enjoy full medical coverage in the years when it's really needed for pennies on the dollar.

      The working class is strapped with high medical premiums and lousy coverage if they can get it.

      Social security for these folks was capped at 2% of income and they could pay no more than a $1500 in the 70's in any year. Yet they hit 62 and they take out more in one year what some of them put in in their working lives.

      The greatest generation is like the good thief , taking our hard earned dollars and enjoying it in the warm states in the winter and replacing any valve or organ they see fit at no cost to them. While we working class stiffs toil with high unemployment and a dysfunctional government That not so great generation of me first set the tone for the social security debacle, medicare debacle, deficit spending, deregulation of the banks and financial system, that caused a myriad of problems that are neatly passed free of sacrifice from them to the next generations.

      There is a cap on social security for those working today…. 7.5% of income on 75,000 where they paid 2% of income with a 1500 cap…… If we are self employed we pay 15%…….. When looking at one retiree who removed money for thirty years, they took out the entire amount they paid in within 1-3years. If you made $30,000 in 1975 that was a good deal of money, at 2% that is $600 for the year paid into SS. A self employed person making $100,000 today pays $15,000 into social security…The average Joe in the great generation paid in $10,000 dollars into the system from 1945 to 1975 when they retired. The most they could have paid was less than $48,000. Yet they take out that each and every year, for 20 30 or 40 years?

      The top payer in our system is paying $450,000 over 30 years and the greatest generation has reserved nothing for this tax paying individual, but happily lives in comfort and security taking money from a system they did not even underfund…..it's unfunded…………….enjoy our money losers..

      It makes no sense of course, we have a two party system that locks each other out and functions like a 1940 car on a 2010 highway.

      The answers are many, the problems are all resolvable, but please do not consider yourself the greatest generation, we are not a generation of fools, at least not all of us.

      To fix the system you need an American System with no party affiliation, enough of that bullshit, I have had it with the parties, let's just vote as individuals………….

      If not we will implode for the many governmental entitlements, deficit interest, and banking system. The banking system is the biggest disaster that is a book unto itself. Unethical individuals acting for themselves in their various systems, be it governmental institutions for learning, taxing authorities, representatives in government…..What a mess we are a human race of me first types led by the greatest generation's parties and policies. Tom Brokow you really pissed me off when I saw that title….

    8. Spiritof76, NH says:

      It has become a pattern in Washington. The same people that brought us to this mess are boldly telling us how to fix it. Barney Frank and Chris Dodd were the key players along with the Feds with their insane and artificial low interest rates that brought us the sub-prime debacle are now behind the so clled financial reform plan. They should be behind bars. Bernanke facilitated (and is still doing it) the debt bubble with his Zero percent interet rate (unprecedented growth in M3) and is now singing a different tune.

    9. Drew Page, IL says:

      The chief economist for the U.S. says the the government policies in effect today are unsustainable costwise. Gee, do ya think? And it only took how long for Mr. Bernake to come up with his conclusion? One that taxpayers have been screaming about for the past year and a half.

      It's not that the Democrats don't understand this, they just don't care. As far as they are concerned, more taxes and more Democrats will fix everything.

      NOVEMBER IS THE ANSWER.

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