By Andrea Salazar
Federal Reserve Chairman Ben Bernanke pointed out Tuesday that fiscal policy is not the only tool needed to fix the nation’s economic problems.
“Fostering healthy economic growth and job creation is a shared responsibility of all economic policymakers, in close cooperation with the private sector,” Bernanke said. “Fiscal policy is of critical importance…but a wide range of other policies - pertaining to labor, markets, housing, trade, taxation and regulation, for example - also have important roles to play.”
Bernanke told members of the Joint Economic Committee that “the recovery is close to faltering.”
Although the chairman would not comment on how, specifically, Congress should act, he did offer some advice.
“As you think about reducing our deficits and putting us on a sustainable path, it’s also important to think about how good is our tax system? How efficient, how effective is it? How equitable is it? How effective is our government spending? Is it producing the results we want. Is it supporting growth and recovery?”
Bernanke said that the financial crises in Europe, the housing market, the job market and consumer behavior are all factors that are hindering domestic growth.
“Consumer behavior has both reflected and contributed to the slow pace of recovery,” Bernanke said. “Households have been very cautious in their spending decisions, as declines in house prices and in the values of financial assets have reduced household wealth, and many families continue to struggle with high debt burdens or reduced access to credit.
Bernanke’s complete testimony is available on the Federal Reserve website.