Federal Reserve Chairman Ben Bernanke should have spoken these words a long time ago, but better late than never.
Bernanke says in his prepared testimony before the Joint Economic Committee, “fiscal policy at the federal level has become significantly more restrictive.”
“In particular,” his testimony says, “the expiration of the payroll tax cut, the enactment of tax increases, the effects of the budget caps on discretionary spending, the onset of sequestration, and the declines in defense spending for overseas military operations are expected, collectively, to exert a substantial drag on the economy this year.”
You can agree or disagree with individual parts of Bernanke’s statement, but the general message is that cutting government spending, regardless of where the money was going, is preventing the economy from taking off quicker than it already is.
This is Bernanke at his most Keynesian moment in front of Congress.
Unfortunately I believe sequestration is here to stay because there’s nothing easier in Washington than preserving the status quo.