Bernanke will say that, despite "daunting fiscal challenges," he expects the nation's economic recovery to pick up speed in 2011. However, he also expects unemployment will remain "stubbornly" high for several years.
"Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established," Bernanke will say.
Even after the economy picks up steam, the nation's federal budget will continue on an "unsustainable path" unless Congress acts on "significant changes in fiscal programs."
"If government debt and deficits were actually to grow at the pace envisioned, the economic and financial effects would be severe," Bernanke will say. He added that the onus is on lawmakers to address the problem early as opposed to being forced to take painful steps later on to prevent a looming crisis.
"One way or the other, fiscal adjustments sufficient to stabilize the federal budget must occur at some point," he will say. "The question is whether these adjustments will take place through a careful and deliberative process that weighs priorities and gives people adequate time to adjust to changes in government programs or tax policies, or whether the needed fiscal adjustments will be a rapid and painful response to a looming or actual fiscal crisis."
Bernanke will point to several plans, including one put forward by the National Commission on Fiscal Responsibility and Reform, also known as the Bowles-Simpson Commission, as "useful starting points for a much-needed national conversation."
"Although these proposals differ on many details, they demonstrate that realistic solutions to our fiscal problems are available," he will say.