Monday, October 20, 2008

Oct. 20, 2008 – 12:51 p.m.

Bernanke Says Stimulus Plan ‘Appropriate’

Federal Reserve Chairman Ben S. Bernanke said Monday it “seems appropriate” for Congress to consider a new economic stimulus bill because of the struggling economy.

Bernanke told the House Budget Committee, “I think it should be significant, but I can’t give you a number” on how large a stimulus package should be.

The committee kicked off a Democratic effort to craft a stimulus package that may be voted on in a lame-duck session. While Bernanke did not endorse any specific proposals, he said the legislation ideally would include provisions “to help improve access to credit by consumers, home buyers, business and other borrowers.”

A scarcity of credit has squeezed banks and other financial institutions and the companies that rely on them to operate on a day-to-day basis.

“With the outlook exceptionally uncertain, the optimal timing, scale, and composition of any fiscal package are unclear,” Bernanke told the committee. “All that being said, with the economy likely to be weak for several quarters, and with some risk of a protracted slowdown, consideration of a fiscal package by the Congress at this juncture seems appropriate.”

Bernanke’s comments will give the Democrats ammunition as they try to persuade congressional Republicans and the White House to get on board their efforts. House Speaker Nancy Pelosi , D-Calif., and Senate Majority Leader Harry Reid , D-Nev., have revived the idea of a broad stimulus in recent days, focusing on spending for infrastructure projects, aid for states, energy assistance for the poor and extended unemployment benefits.

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