Federal Reserve Chairman Ben Bernanke spoke on the economy in a 60 Minutes interview about the economy, explaining the concern about long term job growth and the need for more economic support to boost the system.
Bernanke explained the Federal Reserve will continue to boost easing efforts because the federal government has sent the signal it will focus on deficit reduction instead of additional stimulatory efforts. By focusing on deficit reduction, the American public can rest assured the job growth outlook will not improve anytime soon. Deficit reduction means policies designed to save money, not to get money flowing through the economy which is what creates jobs.
Bernanke's comments seem to indicate the federal government needs to do more for the recovery, not less. The problem is the deficit has grown so large it is difficult to deal with for most Americans. The numbers are larger than they could have imagined.
It is similar to the Reagan era, where a debt topping $1 trillion was unimaginable. Yet, Reagan's budgets increased the debt 180% in eight years. We got used to it. Similarly, politicians ran on deficit reduction, but did little work to honestly cut it. The insistence on passing tax cuts costing $700 billion for the richest among us indicates the same is true today.
The mistake was made a decade ago, and we will be struggling to overcome it for decades to come. When deficits are run up, they need to be paid off. In 2000, American voters decided they did not want to pay off that debt. They made the choice to take a tax cut and ignore the debt, leaving it for future generations. Today, we have far less flexibility to deal with the economy because of those voting decisions.
We made our bed. Now we have to lay in it.