Bernanke Makes Raising the Debt Ceiling Appealing…

June 14th, 2011

…but don’t let him fool you!

We’ll be hearing from Chairman Bernanke tomorrow afternoon following the FOMC meeting. The meeting is scheduled to discuss the financial path post-$600 billion dollar stimulus package. The Federal Reserve and the US Economy have to find out how they will finance their debt if Congress doesn’t permit the debt ceiling to increase.

Bernanke is not holding back as he suggests Congress focus on other ways to cut spending and pull out of the recession, than bickering over the debt ceiling. He is urging for the increase of the debt ceiling and a debt to GDP ratio decrease over a period of time as an alternative solution, as to not put the domestic and international economy in shock:

“I fully understand the desire to use the debt limit deadline to force some necessary and difficult fiscal policy adjustments, but the debt limit is the wrong tool for that important job.”

Bob Schieffer of CBS News makes a point , that Congress is stalling with the debt ceiling because no matter what vote Congress has to make, somebody’s getting voted out come next election. There are two unpopular votes to be made: cut popular spending programs or raise taxes…political suicide.

As Bernanke addresses the public tomorrow in his 3rd press conference this year (I think he’s getting a little spotlight happy). My prediction is he’ll pull out all the stops and bring the President on his team to encourage Congress to raise the debt ceiling by August. They will threaten Congress with words such as “this will effect the American people’s lives and the military,” when in reality if they took the time to cut spending over seas, perhaps pull out of the 140 countries the US occupies, and cut the Drug War they’d be on a much faster track to balancing the budget.

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