Federal Reserve Chairman Ben S. Bernanke told lawmakers today that the recently-passed spending package should help the troubled economy get back on its feet.
"By supporting public and private spending, the fiscal package should provide a boost to demand and production over the next two years as well as mitigate the overall loss of employment and income that would otherwise occur," Bernanke told the Senate Budget Committee.
During his testimony, he discussed both the stimulus measure and the Obama administration's proposed budget for the fiscal year that starts in October. That spending plan projects that the deficit will be $1.8 trillion this year.
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Bernanke said while these near-term deficits are a development "we would have preferred to avoid" not addressing the economic problems with decisive government action "would likely be more costly at the end."
But he warned lawmakers that the spending can't go on indefinitely without causing harm to the economy.
"Without fiscal sustainability, in the longer term we with have neither financial stability nor healthy economic growth," Bernanke concluded.
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