WASHINGTON, D.C. – Today, the U.S. Congress Joint Economic Committee (JEC), Chaired by Senator Bob Casey (D-PA), heard testimony from the Honorable Ben Bernanke, Chairman of the Board of Governors of the Federal Reserve System. The hearing focused on the economic challenges facing the country and what Congress and the Federal Reserve can do to strengthen the economy and promote job creation.
Chairman Casey began by asking about China’s currency policies, “When I talk to people in Pennsylvania and beyond but especially back home, there is unanimity [about] the adverse impact that China currency policies have had on our jobs and our communities…has the Fed attempted to quantify the magnitude of the impact of this subsidy on the US economy or US jobs? Do you have any sense of the aggregate number of jobs lost that you could attribute to this policy?”
Chairman Bernanke replied, “I think, right now, a concern is that the Chinese currency policy is blocking what might be a more normal recovery process in the global economy… the Chinese currency policy is blocking that process, so it is to some extent hurting the recovery process.”
To view their exchange, click here.
The Senate is currently considering new legislation (S. 1619), introduced by a bipartisan group of senators including JEC Chairman Casey, that will crack down on China’s currency manipulation, which costs millions of U.S. jobs and that unfairly and negatively impacts U.S. trade. China’s ongoing undervaluation of the Yuan continues to cause severe economic disruptions and imbalances globally and is taking a significant toll on manufacturers and workers across the United States.
Chairman Bernanke also referenced several short-term strategies that could further boost job creation and help improve the economy, including tax reform policies, “On the tax side, a couple of people have mentioned tax reform and that leaves something to look at that could provide more certainty and a more effective and efficient tax system going forward.” He also noted the importance of policies relating to labor markets, housing, trade, and regulation.
With households and businesses struggling to weather stiff economic headwinds, policymakers have presented several proposals to cut payroll taxes either across the board for employees or employers, or targeted to employers that increase payroll. Among these proposals, Chairman Casey’s Small Business Job Creation Tax Credit Act (S. 1330) will increase employment through tax incentives and give American small businesses the incentives they need to increase hiring.
“Millions of Americans are still struggling in the wake of the Great Recession. The economy is not growing fast enough or adding enough jobs to make significant progress reducing unemployment. The Fed has already used a variety of approaches to ease monetary policy. In the current economic environment, we need to use all available tools to support our economy in the short-term. We also need to take the actions that will get our fiscal house in order in the medium and long-term. The two reinforce each other. Getting our economy growing at a healthy pace is critical to sustained deficit reduction,” continued Chairman Casey.
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