Federal Reserve Chairman Ben S. Bernanke called on lawmakers Monday to “take care of their job” and raise the nation’s debt ceiling, warning that default could derail the still-fragile economic recovery.
In a free-wheeling conversation at the University of Michigan’s Gerald R. Ford School of Public Policy, Bernanke said the debt limit has only “symbolic value” and advocated eliminating it. But he dismissed suggestions that the Fed’s policy of keeping interest rates low is taking pressure off Congress to act.
“We’re not going to be playing games with that. We’re going to follow our mandate,” Bernanke said. “Congress should take care of their job, which is to address the fiscal issues.”
Although he acknowledged that the rising national deficit is unsustainable over the long term, Bernanke said fiscal instability is holding back growth now. He estimated that tax increases and spending cuts in the recent compromise over the federal budget will reduce the nation’s economic output as much as one-and-a-half percentage points this year.