Bernanke to Congress: Don't mess up again. Please.

@CNNMoney August 26, 2011: 12:52 PM ET

NEW YORK (CNNMoney) -- Remember that crazy, bitter debt-ceiling debate this summer? The one that created a half-baked debt reduction plan and led to the country's first-ever credit-rating downgrade?

Federal Reserve Chairman Ben Bernanke certainly does. And he had a simple message for Congress on Friday: Don't do it again. Seriously. Never, ever, ever again.

His reasoning: All that legislative brinksmanship hurt the economy.

"The negotiations that took place over the summer disrupted financial markets and probably the economy as well, and similar events in the future could, over time, seriously jeopardize the willingness of investors around the world to hold U.S. financial assets or to make direct investments in job-creating U.S. businesses." Bernanke said in his annual Jackson Hole speech.

Bernanke also offered some free advice to lawmakers: Reducing the debt should be an urgent priority, but not at the expense of the economy.

Bernanke pledges Fed support, but notes limits

"Fiscal policymakers should not ... disregard the fragility of the current economic recovery. Fortunately, the two goals of achieving fiscal sustainability -- which is the result of responsible policies set in place for the longer term -- and avoiding the creation of fiscal headwinds for the current recovery are not incompatible," Bernanke said.

His suggestion: put in place a credible plan to reduce deficits over time, but also support policies that can boost the chances for near-term economic growth.

That echoed a similar message this week from Congressional Budget Office Director Douglas Elmendorf.

Weak growth. Monster debt. Which to tackle first?

Given the already slow economic recovery and the fact that interest rates can't fall much farther, "reductions in government spending or an increase in taxes ... will slow economic growth and reduce employment," Elmendorf said in a meeting with reporters.

Bernanke did end on a positive note ... sort of. He acknowledged that economic policymakers have a tough job balancing the need to support economic recovery now while also tackling long-term debt.

"I have no doubt, however, that those challenges can be met and that the fundamental strengths of our economy will ultimately reassert themselves," he said.

He then went on to pledge that the Fed will "do all that it can" to help in that process. But that also means that the Fed alone can't single-handedly bolster the economy, and Congress will need to step up.

Lawmakers will have their chance after Labor Day, when President Obama is expected to unveil proposals for creating jobs, and the newly created "Super Committee" will begin negotiations to come up with $1.5 trillion in debt reduction, if not more. To top of page

Overnight Avg Rate Latest Change Last Week
30 yr fixed3.80%3.88%
15 yr fixed3.20%3.23%
5/1 ARM3.84%3.88%
30 yr refi3.82%3.93%
15 yr refi3.20%3.23%
Rate data provided
View rates in your area
Find personalized rates:
Economic Calendar
Latest ReportNext Update
Home pricesAug 28
Consumer confidenceAug 28
GDPAug 29
Manufacturing (ISM)Sept 4
JobsSept 7
Inflation (CPI)Sept 14
Retail sales Sept 14
  • -->

    Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.