During a testimony to the Senate Banking Committee Tuesday, Federal Reserve Chairman Ben Bernanke fielded a series of questions from Sen. Bob Corker regarding the Fed’s response to a combination of tax increases and spending cuts set to go into effect at the end of this year unless Congress intervenes.
Corker attempted to convince the chairman to place responsibility for the impending “fiscal cliff” on a deadlocked Congress, a suggestion Bernanke declined to affirm.
“Candidly, I wish we had a chairman of the Fed that sometimes would say, ‘Look, we’re not doing anything else, we’re pushing rope, and it is up to [Congress] to act responsibly to deal with these fiscal issues, quit looking to us,'” Corker said. “Are you tempted ever to say that to Congress? Would you not say that now?”
“I don’t think that’s my responsibility,” Bernanke replied. “I have been assigned to focus on maximum employment and crisis stability and not to hold threats over Congress’ head. Congress is in charge here, not the Federal Reserve.”
Corker did not seem satisfied with the chairman’s response.
“Very politic answer,” he replied.
The senator then asked Bernanke what further options the Fed might employ to deal with the impending fiscal obstacle, particularly with the state of current interest rates and the recent expansion of the Operation Twist Program. Bernanke suggested different types of purchase programs, including treasury- and mortgage-backed securities, along with the possibility of cutting the interest rate in excessive reserves.
Corker has recently hinted at a “soup to nuts” plan to address the nation’s debt crisis that could be introduced as soon as September. The senator is up for re-election this fall.