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Congress Budget Mandatory To Avoid Recession

— Photo Courtesy http://www.nytimes.com

Speaking  to Congress before the Committee on Banking, Housing, and Urban Affairs,  the Federal Reserve Chairman Ben Bernanke  gave his Semi Annual Monetary Policy Report to Congress where he gave a picture of a weak U.S. economy which is moving very slow.

Bernanke was very adamant that    Congress needed  resolve the impasse  or the economy picture will worsen; into a recession.

The economy is growing modestly but has weakened, Bernanke said. Manufacturing has slowed. Consumers are spending less. And job growth has slumped to an average of 75,000 a month in the April-June quarter from 226,000 a month from January through March. The unemployment rate is stuck at 8.2 percent.

Most importantly he stated a number of times  that Congress needs to take action or the picture will become very dark.

Bernanke noted what the Congressional Budget Office has warned: A recession would occur, and 1.25 million fewer jobs would be created in 2013  without an agreement, tax increases and deep spending cuts would take effect at year’s end.

He said that if  unemployment remains high at 8%  the  Fed is prepared to take further action to try to help the economy.  He did not specify what action the Fed would take but  its been reported that the Feds are already meeting and voting on action possibilities including the purchase of mortgage instruments.

Expressing very clearly that  there is only so much the Feds can do and that his most urgent concern is what will happen if Congress does not take action and does not resolve its budget impasse before the years ends.

He minded congress that cuts in taxes on income, dividends and capital gains would expire. So would this year’sSocial Security tax cut and businesses tax reductions. Defense and domestic programs would be slashed. And emergency benefits for the long-term unemployed would run out.

All that “would greatly delay the recovery that we’re hoping to facilitate,” Bernanke said near the end of two hours of testimony.

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