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Bernanke warns lawmakers must act on economy

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    Fed chairman says fate is in hands of Congress

  • Duration 4:32
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Take the keys -- right that fate of the US economy in the hands of congress that's what the Fed reserve chairman Ben Bernanke is now warning.

He says lawmakers must act is looming tax hikes and spending cuts threaten to drive the US over a fiscal cliff.

Fiscal decision should take into account the fragility of the recovery.

That recovery could be endangered by the confluence of tax increases in spending reductions.

There will take effect early next year if no legislative action is taking that warning -- -- Republican senator John -- a member of the Senate Budget Committee chairman of the Republican conference are good morning to you senator mock combat.

Good morning I'm -- I'm -- -- lot of what he said -- not surprise you what what what rang true what was his bottom line warning.

I think -- -- two things -- said what's gonna impact the conference office -- the economy is slowing we're not creating as many jobs not even enough to keep up with population growth.

And and what's causing -- -- course -- the drama in Europe and secondly the fiscal cliff which.

We don't disagree with the fiscal cliff is a very real issue that's impacting our economy and not only next year but this year supporting Congressional Budget Office.

It could cost us up to one point 3% of economic growth in the first six months of next year.

What's interesting about it however is there have been all these stories here -- there was -- Washington Post story on Sunday and headline read something to the effect.

The Democrats threatened.

To take the economy over the fiscal cliff if Republicans won't raise taxes.

And what they're essentially saying is they're willing to hold the economy hostage.

To get tax increases.

And that to me is just incredibly irresponsible and alarm and fiscal -- need to be dealt with the need to provide the economy certainty.

And the way to do that is to extend the tax rates not seek to increase and raise taxes on a million small businesses which is what their proposal would do.

He settle lot of things yesterday referred to a little bit -- -- it's -- -- modest growth in the economy this weekend manufacturing has slowed down.

He talked about consumer spending -- -- one staffers saying if you do not get this solved by the first of the year we can lose two million jobs.

Come 2013.

I don't see congress allowing that to happen.

What what I see is something being worked out how is it resolved that -- -- now we're -- end of December.

What you will with the -- to be resolved villain in the House of Representatives is gonna vote next week on extending the tax rates.

January 1 we have this massive tax increase yet.

The Americans people.

And in this CBO the Congressional Budget Office as you said all these -- other analysts chairman Bernanke said this yesterday.

If we don't do something about that is gonna lead to an economic slowdown in in in his judgment and the judgment the Congressional Budget Office.

Perhaps a recession.

That we should be willing to plunge the economy into recession.

Simply because we can't agree here on we're going to be with regard to taxes we ought to do is provide certainty.

Extend the rates in the next year hopefully get into the debate about how to reform the tax code.

But in the near term.

We need to extend these tax rates for everyone understand literally are making their how many senate Democrats would vote for that right now.

You have a number -- it's hard to say because that there's a lot of pressure coming from the White House they were they don't want to.

Extend the rates for people making more than 200000 dollars a year which as I said affectionately in small businesses.

But I think there will be Democrats available on that -- simply because people are gonna recognize as time goes on.

How critical it is for us to address this -- understood that allow taxes to go up next year.

You know I know you -- -- -- the week you've been to Boston Romney headquarters you admitted that publicly.

How that conversation go up there.

Well those -- those discussions were some time ago I've obviously had conversations with members of governor Romney's staff have been involved with the campaign from the very early stages.

And I mean I'm encouraged I think we've got a great shot at -- it.

I -- I know you're running short list to you probably would not deny that either did you get a sense that this team is close to making a decision.

About a vice presidential pick or do you think they've already made up their mind.

-- -- -- Well I think -- like personally knows that as governor Romney perhaps if you -- close advisors that's it it's their time in their decision.

I think everybody will -- when that time comes don't make a good choice we will all support it.

And get out and actively campaign for the ticket this fall we have to the stakes are too high.

We need new leadership in the White House -- -- -- the country around considered thank you for coming back with us today.

Breakthrough and I did think it was gonna get much more that VP question and then.

Thank you sir I thought he gets it.

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