Fed. Chairman Urges Congress to Make Budget Deficit a Priority

TOM HUDSON, NIGHTLY BUSINESS REPORT ANCHOR: It was a strong
warning today Susie from the Federal Reserve Chairman Ben Bernanke and we
also heard a pledge late today about financial reforms from the Treasury
secretary. First, the Fed chairman here told a House panel on Capitol Hill
that the Federal budget deficit is growing at an unsustainable and
potentially dangerous rate.

SUSIE GHARIB, NIGHTLY BUSINESS REPORT ANCHOR: Tom, we’ve heard this so many times, but today the Fed
chairman urged lawmakers to make the budget deficit a priority. In
testimony in front of the House Budget Committee, he said they need to
solve the problem of closing that huge gap between government revenues and
expenses. He blamed the rising deficit on an aging population, higher
health care costs and most recently, the recession.

HUDSON: But the chairman warned lawmakers also that slashing Federal
spending carries risks. Just last week for instance, the Federal Reserve
forecast the economy would not fully recover for another two to three
years. And he said the combination of high unemployment, low consumer
confidence and a weak housing market make cutting Federal spending a
delicate job.

BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: Even as fiscal policy makers
address the urgent issue of fiscal sustainability, they should take care
not to unnecessarily impede the current economic recovery. Fortunately, the
two goals of achieving long-term fiscal sustainability and avoiding
additional fiscal headwinds for the current recovery are fully compatible.

HUDSON: Now late today, we heard from another regulator, Treasury
Secretary Timothy Geithner defended financial reforms undertaken by the
Obama administration, arguing there’s no evidence new rules on banks have
hurt the economy. Those comments came just hours after we saw another drop
in new claims for jobless benefits, more good news from the jobs markets
here with claims falling 13,000 in the latest week down to 367,000 in the
week ending January 28. It’s their third straight week below the 400,000
level. Still, investors stayed on the sidelines ahead of tomorrow’s all-
important report on January’s employment levels.


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