The Wall Street Journal-20080117-Bernanke Likely to Support Stimulus Effort
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Bernanke Likely to Support Stimulus Effort
WASHINGTON -- Federal Reserve Chairman Ben Bernanke is expected to offer his support for an economic-stimulus package in his testimony today before Congress.
In discussions with lawmakers in recent days, Mr. Bernanke has outlined his position that a stimulus plan could be useful if properly structured, according to people he has briefed. His key message to policy makers: A stimulus package would need to help the economy this year; avoid boosting the federal deficit in the long term; and support economic growth through increased consumer and business spending.
Sen. Charles Schumer (D., N.Y.) said Mr. Bernanke in a Monday phone call was "generally supportive" of Congress and President Bush enacting stimulus legislation. "He said that while he wasn't going to endorse a specific plan, if an economic-stimulus package was properly designed and enacted so that it enters the economy quickly, it could have a very positive effect on the economy," Mr. Schumer said. He described the conversation yesterday during a hearing on stimulus plans by the Joint Economic Committee, which he chairs.
Mr. Bernanke is scheduled to testify today before the House Budget Committee. Since he became Fed Chairman two years ago, he has generally declined to comment on particular tax or spending proposals and is expected to maintain that stance.
Nonetheless, both Democrats and Republicans are seeking his endorsement for their plans to help consumers and businesses amid recession fears.
Democrats this week have stepped up their demands for urgent action to stimulate the economy. House Speaker Nancy Pelosi of California met yesterday with the top Republicans in the House and both sides characterized the meeting as constructive -- a rare step in what has been a highly partisan Congress. They said discussions would continue.
Today, as Mr. Bernanke speaks on Capitol Hill, President Bush has planned a conference call with Democratic and Republican leaders in the House and Senate to discuss their views on the need for economic stimulus.
House Majority Leader Steny Hoyer of Maryland said it would be possible to get a stimulus package completed in the next 30 days. In the Senate, two top Democrats said they hoped to unveil a House-Senate stimulus proposal before the State of the Union address, scheduled for Jan. 29, where Mr. Bush is also expected to discuss his plan to help the economy.
While both parties profess a desire to work together, Republicans are starting in a very different place from Democrats. Democrats want an extension of unemployment-insurance benefits and tax rebates for individuals. Republicans are also interested in rebates but they also want incentives for businesses while avoiding any tax increases to offset the cost of the package.
To get a deal, Republicans likely would have to drop their demands for making permanent the 2001 and 2003 tax cuts, and pare their wish list of business incentives. Democrats would probably have to depart from their pay-as-you-go budget rule and trim or eliminate public- works spending.
