Although the federal deficit is now dropping, members of Congress should heed Federal Reserve Chairman Ben Bernanke’s recent warnings about the need to focus more on the country’s long-term fiscal imbalances.
“To promote economic growth and stability in the longer term, it will be essential for fiscal policymakers to put the federal budget on a sustainable long-run path,” he told the Joint Economic Committee last month. He expressed concern, however, about the “substantial drag” that current fiscal policies will exert on the economy this year.
Opponents of long-term fiscal reform frequently argue that it should be placed on the back burner until the economy is stronger. Like The Concord Coalition, however, Bernanke says that Washington can protect the economic recovery and start dealing with longer-term fiscal imbalances at the same time.
“To achieve both goals simultaneously,” he said, “ the Congress and the administration could consider replacing some of the near-term fiscal restraint now in law with policies that reduce the federal deficit more gradually in the near term but more substantially in the long run.”