Hensarling Comes Close
In testimony before the House Budget Committee this week, Ben Bernanke called for a plan to be put in place now to reduce deficits once the economy recovers. Already being a (frequently re-affirmed) member of the Announcement Effect Club, Bernanke's testimony was no surprise to readers of our blog or anyone who is familiar with Bernanke's public statements. However, we came close to getting another Announcement Effect Club member during the individual questioning by Budget Committee members. Check out this exchange between Bernanke and Rep. Jeb Hensarling (R-TX):
HENSARLING: Chairman Bernanke, my seconds are ticking away. So real quickly, hopefully it's a yes-or-no question. I thought I've heard you testify before that not only is it important to the long- term sustainability that we have a program to deal with our debt, but it's actually important to economic growth today to send the signal that we have a plan in place. Did I understand you correctly...
BERNANKE: You did.
HENSARLING: ... it's important to have a plan today?
BERNANKE: A plan in place will help keep interest rates down and help growth be stronger in the near term.
It's not exactly clear whether Hensarling was simply clarifying Bernanke's position on the importance of a fiscal plan, or whether he was trying to make his point through the Fed Chairman. Either way, we definitely agree with the thrust of Bernanke's argument, and it is especially relevant with all of the attention being placed on the new stimulus. Coupling an effective stimulus plan with a longer-term deficit reduction plan would show that the government is both supporting the economic recovery in the short term and committing to greater fiscal balance in the medium term.
As for Rep. Hensarling, we're going to need a more affirmative statement of support before we consider making him a full-fledged member of the Club. We're waiting, Jeb.