Search
 

Ezrati’s Economic Outlook: Bernanke’s ‘Fiscal Cliff’

Fed chairman has a point in warnings about the restraints set for 2013.

By Milton Ezrati | Updated on March 13, 2012

Federal Reserve Chairman Ben Bernanke should win a prize for the tone of his recent remarks to Congress. For telling both representatives and senators that the country was approaching a “massive fiscal cliff,” he surely deserves the melodrama-in-everyday-life award. But if Bernanke chose unusually dramatic language to make his point, he had one nonetheless, and maybe the shock value was worth it. 

His remarkable phrase refers specifically to the economic danger of the fiscal restraint already scheduled to take effect on Jan. 1, 2013. A sudden cut in spending and a sudden rise in taxes, as will occur in 2013, when the Bush tax cuts are set to expire, could cripple an already subpar recovery and inadvertently compound budget problems. More significant, however, is the chairman’s implicit reminder in these remarks that for all the need to control deficits and the budget, policy makers must also consider how tax and spending decisions impact the economy, immediately and over the long run. Deficits and budget reform are more complex matters than many on both sides of Washington’s political divide seem to believe. His remark also served as a reminder to politicians, and, through them, to the public generally, that there is only so much the Fed can do.

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.

Already have an account?

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Dig Deeper

Recommended Stories

Treasury & Risk

Join Treasury & Risk

Don’t miss crucial treasury and finance news along with in-depth analysis and insights you need to make informed treasury decisions. Join Treasury & Risk now!

  • Free unlimited access to Treasury & Risk including case studies with corporate innovators, informative newsletters, educational webcasts, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM publications including PropertyCasualty360.com and Law.com.

Already have an account? Sign In Now
Join Treasury & Risk

Copyright © 2024 ALM Global, LLC. All Rights Reserved.