What do central bankers and slalom skiers have in common? Bobbing and weaving, for one thing.
Federal Reserve Chairman Ben Bernanke sat in front of lawmakers for a second day on Thursday to deliver his semi-annual assessment of the economy, cleverly sidestepping the obstacles they placed to his right and left. With election season fast approaching, each side wanted ammunition for their campaigns, and for their partisan readings of the economy.
Not surprisingly, the resolutely apolitical Bernanke trod carefully. For the Democrats, there was comforting agreement that this week’s bill to regulate Wall Street had placed the financial system on a sounder footing and reduced the risk of another devastating financial crisis. Last year’s $862 billion economic stimulus had saved or created somewhere between one and three million jobs, Bernanke said, and the government was right to run a fiscal deficit in 2010 to support the economy.
But Republicans did not come away empty handed either, with Bernanke emphasizing that the medium and long-term fiscal path was unsustainable. Rep. Jeb Hensarling of Texas wanted Bernanke to agree that excessive government regulation, the costs of healthcare legislation and uncertainty about government policy had significantly constrained business investment and hiring, and went as far as to quote a 1979 Ph.D thesis on the effects of uncertainty.
“You know who wrote those words?” he asked. “And yes, it is a trick question.”