Bernanke to Congress: The Economy Needs You to Keep Spending

Federal Reserve Chairman Ben Bernanke reiterated Wednesday his belief that Congress should continue to prop up the sputtering economy, casting aside concerns that the federal budget deficit should trump the economy’s need for additional stimulus.

In other words, Congress should spend now and worry about deficits later.

“At the current moment the large deficits, as unattractive as they are, are important for supporting economic activity,” the nation’s central banker told a Senate panel, citing “weak” private spending and a “great deal of excess capacity.”

Bernanke added that he’d be “reluctant to withdraw that support too precipitously in the near term.” His comments strongly echoed remarks he made in June.

The debate over budget deficits versus stimulus spending has gripped the nation’s capital as the economy, though technically in recovery, continues to exhibit negative trends. For one, the national unemployment rate is essentially unchanged from June 2009. At 9.5 percent, it’s fluctuated in the intervening year, rising to 10.1 percent in October before dropping back down last month. About half of the nation’s unemployed workers have been jobless for at least six months.

In addition, foreclosures continue to mount. Consumers continue to hold back on spending. Credit is tight. And banks and corporations are sitting on record amounts of cash, worried about expansion during a time of such great uncertainty.

Left-leaning Democrats in Congress want to keep their foot on the pedal, pumping money into the economy to make up for the lack of private demand. Moderates and Republicans are more cautious, warning about unsustainable budget deficits and the mounting national debt. The total outstanding pubic debt was $13.2 trillion as of Tuesday, Treasury Department data show.