Federal Reserve Chairman Ben Bernanke told Congress on Thursday that he supported quickly passing measures to stimulate the economy to complement the Fed’s interest-rate cuts and other moves. The statement was considered important as the White House and lawmakers discuss a stimulus package, because many members of Congress are reluctant to move without Bernanke’s blessing. (The New York Times, free registration)
What the commentators said
Bernanke has to walk a “political tightrope” to keep his “bipartisan cred,” said David Wessel and Phil Izzo in The Wall Street Journal’s Economics blog. Democrats were hoping Bernanke would oppose making President Bush’s tax cuts permanent as part of any stimulus package, while “Republicans wanted him to say the opposite.” By endorsing a stimulus—but only “temporary” tax relief—he gave both sides a “little ammunition.”
What Bernanke called for was putting money directly into “taxpayers’ and consumers’ pockets,” fast, said Frank James in Tribune’s The Swamp blog. “That will have the biggest bang for the buck.” That means “a tax rebate to give taxpayers a few extra hundred dollars,” or “an extension of unemployment benefits” would fit the bill. Making Bush’s tax cuts permanent wouldn’t, because any economic benefit would come too late to help stave off a recession.
Both Bush and the Democrats want to rush through some kind of stimulus, said Jonathan Weisman and Jeffrey H. Birnbaum in The Washington Post (free registration). But a “potentially debilitating brew of presidential politics, ideological differences, and special interest lobbying” could make it hard to agree on what to do. The Democratic contenders are in a “bidding war” over their stimulus proposals, but the GOP hopefuls are warning Congress not to spend too much on “an economic stimulus they are not even sure is warranted.”