JOHNSON STATEMENT ON SEMIANNUAL MONETARY POLICY REPORT

WASHINGTON – Today, Senate Banking Committee Chairman Tim Johnson (D-SD) held a hearing on the Federal Reserve Bank’s Semiannual Monetary Report to the Congress. The Committee heard from Fed Chairman Ben Bernanke, and discussed the ongoing economic recovery.

 

“I am pleased that our economy continues to show positive signs of recovery – 2.8 percent growth in 2010 is a start,” said Chairman Johnson.  “But I remain concerned about sustaining the recovery and being able to strike the right balance of positive growth, low inflation, increased employment, and long term deficit reduction. 

 

“As Chairman of the Fed you have strived to strike that balance, but not without some controversy.  The Fed has taken unprecedented steps to minimize the negative impact of the financial crisis and get us back on track, including a second round of quantitative easing. While some critics have been very vocal, even going so far as to call for an end to the Fed’s dual mandate, I believe you should be commended for your work.

 

“As the economy continues to struggle to recover, we should be using every tool in the toolbox to create jobs and spur growth. Taking tools away from the Fed now is the wrong idea at the wrong time.

 

“Congress has taken steps to spur growth, including measures to increase small business lending and provide needed certainty and protections in the financial system.  There is certainly more we in Congress can and must do to ensure our economy is on solid ground.  And only then can we turn our focus entirely to deficit reduction.”

 

 

“I want to thank Chairman Bernanke for being here today to deliver the semiannual Monetary Report to the Congress. Chairman Bernanke, your reports to this Committee are a reminder of how far we have come in just a few short years, but also the challenges our nation continues to face. 

 

“I am pleased that our economy continues to show positive signs of recovery – 2.8 percent growth in 2010 is a start.  But I remain concerned about sustaining the recovery and being able to strike the right balance of positive growth, low inflation, increased employment, and long term deficit reduction. 

 

“As Chairman of the Fed you have strived to strike that balance, but not without some controversy.  The Fed has taken unprecedented steps to minimize the negative impact of the financial crisis and get us back on track, including a second round of quantitative easing. While some critics have been very vocal, even going so far as to call for an end to the Fed’s dual mandate, I believe you should be commended for your work.   

 

“As the economy continues to struggle to recover, we should be using every tool in the toolbox to create jobs and spur growth. Taking tools away from the Fed now is the wrong idea at the wrong time.

 

“Clearly, there are many challenges ahead and the Fed has an important role to play.  American consumption continues to be depressed and without increased demand, businesses will be reluctant to expand, increase output, or hire new employees.  It was encouraging to see the unemployment rate drop to 9.0 percent in December, but the duration of the average unemployment period has increased.  While subprime mortgages made up the initial wave of the foreclosure crisis, we are now also seeing millions of families facing foreclosure because of unemployment.  Even optimistic forecasters say it will be several years before the unemployment rate returns to pre-crisis levels, but it’s going to require effective policies to jump-start hiring, production, and exports.   

 

“Congress has taken steps to spur growth, including measures to increase small business lending and provide needed certainty and protections in the financial system.  There is certainly more we in Congress can and must do to ensure our economy is on solid ground.  And only then can we turn our focus entirely to deficit reduction.

 

“Chairman Bernanke, today I am very interested in hearing your analysis of our current economic situation, and what more Congress and the Fed can do to increase output, employment and overall economic growth.  I would also like to hear your thoughts on how we balance sustainable economic growth amid calls to cut government spending and reduce the nation’s deficit.  

 

“As a nation we face some significant challenges, and I appreciate your thoughts on these challenges today.”