Fed chairman Ben Bernanke closed his Wednesday remarks
in Dallas by sounding a warning on the national deficit.
"Inevitably," he said, "addressing the fiscal challenges posed by an
aging population will require a willingness to make difficult choices."
To avoid large and unsustainable budget
deficits, the nation will ultimately have to choose among higher taxes,
modifications to entitlement programs such as Social Security and
Medicare, less spending on everything else from education to defense,
or some combination of the above. These choices are difficult, and it
always seems easier to put them off--until the day they cannot be put
off any more. But unless we as a nation demonstrate a strong commitment
to fiscal responsibility, in the longer run we will have neither
financial stability nor healthy economic growth.
What's really going on here? Thoughts from some of the top economics and business commentators:
News--But Bernanke's Actually Thinking Global Bernanke just "repeated
what many economists and debt ratings agencies have said," 24/7 Wall
St.'s Douglas McIntyre
explains. He also pulls out a point from the address that few others
do: "Bernanke is worried, it seems, not just about American debt, but
about whether the world has enough money to absorb it with all the
other nations, companies, and consumers needing to borrow at the same
time. The pool of capital looks infinite now, but history says that
infinity is never more than temporary."
- That Aging Population Problem Mark Thoma
at Economist's View looks at how Bernanke talked about the deficit in
the context of the aging population and the strain on Social Security
and Medicare. He directs the reader to a CBO, report, though, showing
that demographics "is not the main problem ... it is health care costs
rising independent of the aging population that must be addressed."
Meanwhile, delayed retirement may help offset the problem of an aging
population with regard to Social Security and Medicare.
- Expect Fiscal Responsibility Message to Spread "Having made his pitch to Congress," writes Jon Hilsenrath for The Wall Street Journal on Wednesday, "Mr. Bernanke is now likely to make it to the public more broadly." The Wednesday speech was a step in that direction.
- 'It's His Low Rates Funding Washington's Enormous Deficit,' argues Business Insider's Joe Weisenthal, a few days before Bernanke's remarks. "Indirectly, of course," he adds.
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