Ben Bernake should be removed as the Chairman of the Federal Reserve as Sen. Bernie Saunders has recommended. Bernanke actually has no business commenting on entitlements because the Federal Reserve has no vested interest in these programs.
Obama has been working to reform Medicare already and Social Security is really more like a forced savings plan. The weakness of Social Security is that is a regressive tax that is capped at $106,800. This means the tax is primarily paid for by the middle class and the poor.
If all Americans were taxed at 100 per cent of their income like Medicare, Social Security would have plenty of funds and the overall taxable rate on this payroll tax could be reduced. Both Medicare and Social security are payroll taxes.
Remember the lock box. The federal government has been taking the excess payments to Social Security and using those funds for general revenues programs which is what Income Tax is supposed to have funds for.
Ben Bernanke has overseen the greatest expansion of the Federal Reserves' balance sheet in its history, pouring trillions of dollars into Wall Street firms at roughly zero interest rates. His generosity clearly has a limit.
In testimony before the Senate Banking Committee today, where he's seeking re-appointment as the Fed's chairman, Bernanke called for cutbacks in Medicare and Social Security even as unemployment rises and the middle class is endangered.
Bernanke reminded Congress that it has the power to repeal Social Security and Medicare.
"It's only mandatory until Congress says it's not mandatory. And we have no option but to address those costs at some point or else we will have an unsustainable situation," said Bernanke.
Bernanke needs to be realistic in view of the Democratic Senate who will confirm him and the Democratic president he works for. The Democratic Party created both programs and will not repeal them. Medicare and Social Security did not cause the national debt to double. This was caused by unneeded tax cuts for affluent Americans and the Iraq and Afghan Wars.
There are several other obvious options that could make the situation sustainable -- including a transaction tax on Wall Street speculation or a slight tax hike on the wealthiest Americans. Bernanke talks as if increasing taxes on the wealthy simply isn't an option. Keep in mind that Bush cut taxes for the top two American tax brackets and also started a war. No president had ever cut taxes and also started a war.
Sen. Jack Reed (D-R.I.) pointed out that "there's only really two ways you can deflect this deficit, and that's either by cutting expenditures or raising income taxes or other forms of taxes."
Reed asked him if he could think of other ways, but Bernanke returned to entitlement money as the way to balance the budget.
"Those decisions are up to Congress," Bernanke said. "Well, your predecessor signaled very strongly that the tax cuts in 2000 were appropriate," Reed reminded him.
"I have not done that. I've done my best to leave that authority where it belongs, with the Congress," Bernanke said, just moments after telling Congress to cut entitlement spending.
Sen. Bernie Sanders, an independent from Vermont who has placed a hold on Bernanke's nomination, was apoplectic when HuffPost told him Bernanke was pushing for cuts in entitlement spending. "Bernanke wants to cut entitlement spending? Well, that confirms everything I'm saying," Sanders fumed.
"The CEOs and top people on Wall Street make huge bonuses, and what? We're going to cut back on Social Security and Medicare? That's what we're going to do?"
Rightardia agrees with Saunders. Bernanke's discussion about entitlements is a Red Herring and Bernanke should have been smart enough to know that. He is presenting himself as a leg hugging supply sider who thinks cutting taxes for the affluent will solve everything. We tried that for eight years. It didn't work.
Obama should fire Bernanke and get a more progressive person into the Federal reserve. We need an economist with strong Keynesian economic credentials, not Ben Bernanke. He is clearly the wrong person to chair the Federal Reserve.
source: http://www.huffingtonpost.com/2009/12/03/bernanke-channels-willie_n_378963.html
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