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After 25 ½ hours of talks in Brussels, the 2014 – 2020 European Union Budget was agreed upon including deeper cut as pressed by U.K. Prime Minister David Cameron to 960 billion euros down for 1.047 trillion euros less than the current budget.
“We simply could not ignore the extremely difficult economic realities across Europe,” EU President Herman Van Rompuy told reporters. “It’s perhaps nobody’s perfect budget, but there’s a lot of it for everybody. This budget is future- oriented, it is realistic and it is driven by pressing concerns.” Read more for details.
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.