News / USA

Bernanke: Failure To Make Debt Deal Would Be 'Calamity'

Chairman of the Federal Reserve Ben Bernanke (file photo)
Chairman of the Federal Reserve Ben Bernanke (file photo)

U.S. Federal Reserve Chairman Ben Bernanke says the economy could fall back into recession if congressional Republicans and President Obama cannot reach an agreement to raise Washington's legal limit on borrowing.  The head of the U.S. central bank says without a deal, the country could lurch back into recession.

U.S. Federal Reserve Chairman Ben Bernanke told a key congressional committee that failing to raise the debt ceiling would have serious consequences.

"I think the worst outcome if we don't raise the debt limit is that at some point we default on the debt and as I've said before, that would create a huge financial calamity, and that in turn would affect everybody and it would set job creation back significantly," said Bernanke.

Bernanke was addressing the the Financial Services Committee in the House of Representatives, where some Republicans indicated they thought he was overstating the impact of a default.

But Bernanke said there is no choice in this case.

"The right analogy for raising the debt limit is having a spending spree with your credit card and then refusing to pay your bill," he said. "That is what refusing to raise the debt limit is."

Bernanke has been urging congress and the president to reduce the U.S. debt for some time, but he objects to proposals to immediately slash spending sharply.  He argues such cuts could hurt economic growth, which could result in lower tax receipts, and have the unintended consequence of making the debt worse.

Bernanke says it took Washington years to run up these debts, and paying them off will have to be done over time with care.

Bernanke heads the U.S. central bank, and was reporting on the state of the U.S. economy.  He said U.S. economic growth will pick up in the second half of the year as high prices ease for energy and fuel.

He said growth will probably rise to an annual rate of around 2.8 percent, which is faster than the first few months of this year, but slower than the last quarter of 2010.

Bernanke indicated that the Fed is prepared to take additional steps to stimulate the economy if the current lull in growth continues.  

Fed experts say the U.S. unemployment rate will fall from its current 9.2 percent, but not as quickly as previous predictions.

Related video by Mil Arcega:

You May Like

How to Safeguard Your Mobile Privacy

As the digital world becomes more mobile, so too do concerns about eroding privacy and increased hacking More

'Desert Dancer' Chronicles Iranian Underground Dance Troupe

Film by Richard Raymond is based on true story of Afshin Ghaffarian and his friends More

Obesity Poses Complex Problem

Professor warns of obesity’s worldwide health impact More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Rolling Thunder Run Reveals Changed Attitudes Towards Vietnam Wari
X
Katherine Gypson
May 25, 2015 1:32 AM
For many US war veterans, the Memorial Day holiday is an opportunity to look back at a divisive conflict in the nation’s history and to remember those who did not make it home.
Video

Video Rolling Thunder Run Reveals Changed Attitudes Towards Vietnam War

For many US war veterans, the Memorial Day holiday is an opportunity to look back at a divisive conflict in the nation’s history and to remember those who did not make it home.
Video

Video Female American Soldiers: Healing Through Filmmaking

According to the United States Defense Department, there are more than 200-thousand women serving in the U.S. Armed Forces.  Like their male counterparts, females have experiences that can be very traumatic.  VOA's Bernard Shusman tells us about a program that is helping some American women in the military heal through filmmaking.
Video

Video Iowa Family's Sacrifice Shaped US Military Service for Generations

Few places in America have experienced war like Waterloo. This small town in the Midwest state of Iowa became famous during World War II not for what it accomplished, but what it lost. As VOA’s Kane Farabaugh reports, the legacy of one family’s sacrifice is still a reminder today of the real cost of war for all families on the homefront.
Video

Video On Film: How Dance Defies Iran's Political Oppression

'Desert Dancer' by filmmaker Richard Raymond is based on the true story of a group of young Iranians, who form an underground dance troupe in the Islamic Republic of Iran. This is the latest in a genre of films that focus on dance as a form of freedom of expression against political oppression and social injustice. VOA’s Penelope Poulou has more.
Video

Video Turkey's Ruling Party Trying to Lure Voters in Opposition Stronghold

Turkey’s AK (Justice and Development) Party is seeking a fourth successive general election victory, with the goal of securing two-thirds of the seats in Parliament to rewrite the constitution and change the country's parliamentary system into a presidential one. To achieve that, the party will need to win seats in opposition strongholds like the western city of Izmir. Dorian Jones reports.
Video

Video Millions Flock to Ethiopia Polls

Millions of Ethiopians cast their votes Sunday in the first national election since the 2012 death of longtime leader Meles Zenawi. Mr. Meles' party, the Ethiopian People's Revolutionary Democratic Front, is almost certain of victory again. VOA's Anita Powell reports from Addis Ababa.
Video

Video Scientists Testing Space Propulsion by Light

Can the sun - the heart of our solar system - power a spacecraft to the edge of our solar system? The answer may come from a just-launched small satellite designed to test the efficiency of solar sail propulsion. Once deployed, its large sail will catch the so-called solar wind and slowly reach what scientists hope to be substantial speed. VOA’s George Putic reports.
Video

Video FIFA Trains Somali Referees

As stability returns to the once lawless nation of Somalia, the world football governing body, FIFA, is helping to rebuild the country’s sport sector by training referees as well as its young footballers. Abdulaziz Billow has more from Mogadishu.
Video

Video With US Child Obesity Rates on the Rise, Program Promotes Health Eating

In its fifth year, FoodCorps puts more than 180 young Americans into 500 schools across the United States, where they focus on teaching students about nutrition, engaging them with hands-on activities, and improving their access to healthy foods whether in the cafeteria or the greater community. Aru Pande has more.
Video

Video Virginia Neighborhood Draws People to Nostalgic Main Street

In the U.S., people used to grow up in small towns with a main street lined by family-owned shops and restaurants. Today, however, many main streets are worn down and empty because shoppers have been lured away by shopping malls. But in the Del Ray neighborhood of Alexandria, Virginia, main street is thriving. VOA’s Deborah Block reports it has a nostalgic feel with its small restaurants and unique stores.

VOA Blogs