Fed Chair Ben Bernanke, whose apostasy once knew no bounds, has finally found religion. He’s joined the Church of Our Lady of the Deficit. After a couple of years of deficits climbing through the roof during which we heard not a peep from him about their effect on our financial future, Mr Bernanke is suddenly concerned. Very concerned.
Federal Reserve Chairman Ben S. Bernanke warned Congress yesterday of a “fiscal crisis” if it doesn’t curb the projected growth of federal spending on retirement and health-care programs.Echoing similar warnings by his predecessor, Alan Greenspan, Bernanke told the Senate Budget Committee that “the effects on the U.S. economy would be severe” if the government’s debt were allowed to balloon as forecast.
Hmmm. Why this sudden switch?
Bernanke noted that the federal deficit has declined –
Whoa, old horse. Declined? Declined??? Whose numbers is he looking at, France’s?
– in the past two years but said that was “the calm before the storm” of skyrocketing expenses for an aging population. He cited Congressional Budget Office projections that spending on the big entitlement programs — Social Security, Medicare and Medicaid — will equal 15 percent of the nation’s gross domestic product by 2030, double last year’s level. (emphasis added)
Mr Bernanke is patently NOT concerned about the enormous amount of money being spent in Iraq (an estimated $$$1.2 Trillion$$$), and the even more enormous amounts about to be spent if the Congress doesn’t call a halt to Bush’s new “plan”. That gigantic pool of $$$$ isn’t a strain on the budget even though we’re borrowing it. In fact, it apparently isn’t even included in his definition of “deficit” since he doesn’t mention it.
No, what exercises Mr Bernanke’s worry cells is the possibility that social programs like Soc Sec and Medicare might cause a “fiscal crisis”. Continue reading