U.S. Federal Reserve Chairman Ben Bernanke says reducing federal debts and deficits are important factors in improving the nation's economic recovery and the creation of new jobs. Testifying before the Senate Banking Committee, of which Idaho Senator Mike Crapo is a member, Bernanke warned Congress that it is important to develop a long-term plan to reduce U.S. government debt levels while avoiding massive tax increases or spending cuts.
"Chairman Bernanke told us that significant, comprehensive debt-reduction efforts are necessary to improve our economy," Crapo said following the hearing. "With across-the-board tax increases looming at the end of this calendar year for every single American family and for many small businesses, we need to reach consensus as soon as possible to avoid these sharp tax increases that will stifle job creation and growth at a time when our economy cannot afford it. We need to send the message to private-sector job creators and the world markets that the U.S. has a plan to reduce its debt and spur economic recovery. This is not about more government spending; it is about reducing the debt and implementing tax reform that will encourage investment and job creation."
Crapo said it is important for members of Congress to hear Chairman Bernanke's call to establish fiscal responsibility. The Chairman noted in his opening testimony, that if Congress does not act legislatively to deal with the coming "fiscal cliff," it could lead the country back into a recession.
Bernanke said, "The Congressional Budget Office has estimated that, if the full range of tax increases and spending cuts were allowed to take effect--a scenario widely referred to as the fiscal cliff--a shallow recession would occur early next year and about 1.25 million fewer jobs would be created in 2013." He continued, "The most effective way that the Congress could help to support the economy right now would be to work to address the nation's fiscal challenges in a way that takes into account both the need for long-run sustainability and the fragility of the recovery."