October 29, 2010
The front page of the business section of the New York Times featured this headline today: Bernanke’s Reluctance to Speak Out Rankles Some. The article states that Bernanke is “reluctant to prominently voice” his private support for more stimulus spending to support the economy. At several points, the reporter opines about Bernanke’s reasons for, and success at achieving, such restraint:
What is clear is that Mr. Bernanke is intent on not embroiling the Fed in a partisan brawl, and that he believes the central bank should weigh in on fiscal policy in only the broadest terms
But Mr. Bernanke, who was confirmed to a second term in January by an uncomfortably narrow margin, has been adroit in avoiding fiscal controversy.
And he selects this quote from Bernanke’s House testimony in September:
“I’m reluctant to take positions on specific tax and spending measures,” he told Representative Spencer T. Bachus of Alabama, the top Republican on the House committee that oversees the Fed. “I’m sure you can understand my position on that.”
Perhaps the reporter doesn’t remember Bernanke’s infamous “Willie Sutton” Senate testimony in December 2009? Picked up by outlets as varied as the Huffington Post and the Wall Street Journal, Bernanke very clearly inserted himself in fiscal contoversy by taking a specific position on spending. John Judis at the New Republic posted the relevant statement:
MR. BERNANKE: And on the spending side again, you know, Willie Sutton robbed banks “because that’s where the money is,” as he put it. The money in this case is in entitlements. Those are the programs which are growing. At the rate we’re going in about 15 years the entire federal budget will be entitlements and interest and there won’t be any money left over for defense or any of the other activities. So clearly we’re facing a very difficult structural problem in that we have an aging society and rising health care costs, and the government has very substantial obligations.
I’m not in any way advocating unfair treatment of the elderly who have, you know, have worked all their lives and certainly deserve our support and help, but if there are ways to restructure or strengthen these programs that reduce costs, I think that’s extraordinarily important for us to try to achieve.
It didn’t make sense to me then, and it still doesn’t now. Bernanke very specifically identified (or targeted) entitlements for spending cuts, then tried to cover himself by stating that he’s not advocating “unfair treatment of the elderly.” As CEPR has shown in several recent papers — such as The Impact of Income Distribution on the Length of Retirement, Hard Work?, and The Impact of Social Security Cuts on Retiree Income — it’s impossible to make cuts to Social Security (a main entitlement program) without hurting retirees.
It seems the New York Times either doesn’t have the fact-checking ability to find the Bernanke’s “Willie Sutton” testimony, or it chose to ignore it in order to promote the myth of Bernanke’s wise restraint from tax and spending debates. Either way, I’m disappointed in my hometown paper (and the Newspaper of Record).
