Amid calls from Tea Partiers and other conservatives to reduce the federal deficit, Federal Reserve Chairman Ben Bernanke on Wednesday warned Congress not to radically reduce spending or raise taxes. Not yet, anyway. The budget is on an "unsustainable path," he said, and the government needs a plan for dramatically reducing it — but doing so now might derail the nation's "fragile" economic recovery. The Fed chairman also raised the option of using additional short-term stimulus spending to keep the economy on track. Is Bernanke overplaying the dangers, or are we really in jeopardy of slipping back into recession? (Watch a Reuters report about Bernanke's testimony)
"We're falling into a double-dip recession": The stimulus is one of the only reasons we're not already in a double-dip recession, says former Labor secretary Robert Reich on his website. We desperately need more to keep the recovery alive, "but the deficit crazies in the Senate, who can’t seem to differentiate between short-term stimulus (necessary) and long-term debt (bad)" are determined to shoot down any new stimulus spending. That will send us into a double-dip recession.
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