Quotational Therapy: Part 52 -- Ben Bernanke, New Fed Chief.
Ben Bernanke-
President Bush has named Ben Bernanke as his choice to replace for Federal Reserve Chief Alan Greenspan. It's a great choice.
So what is Bernanke all about?
Bernanke, the Chairman of the Council of Economic Advisers spoke on the American economy at the National Bureau of Economic Research Conference on Tax Policy and the Economy, September 15, 2005:
In the wake of Hurricane Katrina, a critical objective for policy will be helping to restore the communities and the economy of the Gulf Coast . We must also continue the types of economic policies that have brought us through these shocks and that will ensure continued healthy growth. These policies include making tax relief permanent, reducing the budget deficit by limiting spending, strengthening retirement and health security through efforts like Social Security reform, fostering a healthy and well-educated workforce, promoting fair and open trade, and enhancing energy security.
Good tax policy is an important source of economic growth. Tax relief played a central role in the economic recovery of recent years by reducing marginal tax rates, increasing disposable income, and creating incentives for firms to invest and hire workers. The President continues to work with Congress to make tax relief permanent. The President has also appointed an advisory panel to make recommendations on how the tax code can be reformed to make it simpler, fairer, and more conducive to growth. Because of the need for the Administration and Congress to focus their energies on responding to the impact of hurricane Katrina, the panel's work has been briefly delayed, but their recommendations will be presented in due course and will doubtlessly be a valuable contribution to the tax policy debate.
To make tax relief more effective, government spending needs to be controlled. This year the President's budget proposes to cut non-security discretionary spending by 1 percent from last year's level; it does this by eliminating or substantially reducing numerous duplicative programs and providing only limited increases to others. We are already on track to reduce the budget deficit over time. In the mid-session review of the budget, the Office of Management and Budget was able to report that strong economic growth this past year increased tax revenues more than expected, reducing the estimated 2005 budget deficit by $94 billion (to $333 billion, or 2.7 percent of GDP). As of June, tax receipts were running 13.8% higher than a year earlier. This development puts the federal government ahead of schedule to meet the President's target of cutting the deficit in half by 2009. The costs of rebuilding after Katrina are of course substantial and will add to the budget deficit in the near term; incurring those costs is essential if we are to repair the unprecedented damage wrought by that natural disaster. This necessary spending should not, however, jeopardize the President's long-term deficit reduction goals.
For the longer term—I am speaking now of the outlook over the next few decades—budget discipline will require controlling entitlement spending, notably spending on Social Security and Medicare. The President has called for reforms to Social Security to make it permanently solvent and to do so in a progressive manner that will keep the system an effective safety net for lower-income retirees. Social Security has an $11 trillion unfunded liability that cannot be ignored for long.
The President has also proposed to give all workers, including low-income workers, the opportunity to build retirement wealth by investing a portion of their payroll taxes in a voluntary personal account. Voluntary personal retirement accounts in Social Security would give workers a greater sense of ownership and control over their retirement assets; by enhancing financial education, they may also stimulate workers to do additional saving on their own.
Read the entire thing here (http://www.whitehouse.gov/cea/outlook-20050915.html).
I support this nomination strongly. Strongly.
He's for lower government spending before tax hikes to get the federal budget in order. He supports Social Security and Medicare reform. He believes in the power of the American economy. And he's not quite as cryptic and ambivalent as Alan Greenspan when talking about these issues.
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