Tags: Schumer | Fed | Congress | Economy

Schumer to Fed: Don’t Wait for Congress to Help Economy

Tuesday, 17 July 2012 02:24 PM

Only the Federal Reserve has the will to act and spur more lasting economic recovery even if the central bank's tactics aren't the righte medicine the economy needs right now, Sen. Charles Schumer, D-NY, told Fed Chairman Ben Bernanke.

The Fed has stimulated the economy via interest-rate cuts and massive liquidity injections via bond buybacks from banks to encourage recovery, although the monetary policy officials say Congress must act with fiscal measures now, as monetary measures have mainly done all they can.

While deficits need cutting, a series of tax hikes and spending cuts are set to kick in at the end of the year, a combination known as "a fiscal cliff" that could derail recovery next year.

Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

Congressional action is not going to happen in an election year so the Fed should act even if doing so won't spur as much recovery as previous measures but would at least act as a floor.

“Given the political realities, particularly in this election year, I’m afraid the Fed’s the only game in town,” Schumer said at Bernanke's semiannual monetary-policy testimony, as reported by CNBC.

“I would urge you to take whatever actions you think would be most helpful in supporting a stronger economic recovery.“

Fiscal stimulus from the White House is also unlikely.

“The bottom line is very simple, we’re not going to get the fiscal relief we want at least over the next short while. Perhaps after November we will,” Schumer said.

Bernanke, meanwhile, said the Fed stands ready to act but only if the economy worsens.

"Reflecting its concerns about the slow pace of progress in reducing unemployment and the downside risks to the economic outlook, the Committee made clear at its June meeting that it is prepared to take further action as appropriate to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability," Bernanke told lawmakers, according to a copy of his speech.

Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

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Tuesday, 17 July 2012 02:24 PM
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