Bernanke Talks Recovery as Congress Plays Politics
Hensarling took his jabs, saying he felt the "stagnant" growth of the economy in recent years was correlated to the Fed's actions. Though Bernanke pointed out that the Fed is independent of the federal government's direction, many voters still think of them as operating in tandem. So, when Hensarling canvases his district in 2014 and voters press him about government expansion, he can show (among other situations) that he opposed Bernanke and the Fed's current policies.
Rep. Maxine Waters (D., Calif.), the ranking Democrat on the committee, led with her praise of how Bernanke and the Fed have softened fallout from the financial crisis. Generally, Democrats in the House don't spend a lot of time offering great approval of the central bank's actions, but they are a bit less antagonistic when broaching the subject. Stability since the 2008 financial collapse, a slowly improving labor market, a revived housing market and the avoidance of an economic depression can link back to Fed monetary action that started during the crisis.
Democrats have enjoyed much political success since those policies launched at the very end of the Bush administration: Barack Obama won the White House in 2008 and grabbed reelection in 2012; Democrats won a supermajority in the Senate and retained the House in 2008, and retained power in the Senate in 2010 and 2012. Despite losing the House in 2010, Democrats have held on to great power amid the huge economic struggles of the past five years.
Bernanke stuck to script on Wednesday (he's been through enough of these hearings to understand the motivations of the politicians and he largely avoided the politics) and reiterated much of what the market already expected.Below are a few major points the Fed chairman made in his prepared testimony. Bernanke said the pace of the Fed's bond purchases are not on a pre-set course, and that the Fed may begin to taper its monetary stimulus in 2013 and possibly end in 2014. Additionally, Bernanke's testimony said the labor market is improving gradually, but that it is far from satisfactory. Bernanke said that risks to the economy have eased since the fall of 2012.
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