By Peter Schroeder - 02/27/13 06:52 PM EST
House Republicans mounted significant pressure on Federal Reserve Chairman Ben Bernanke Wednesday, as they criticized his policies and criticism of the pending sequestration.
Appearing before the House Financial Services Committee, Bernanke had to defend himself from skepticism and accusations for several hours, as GOP lawmakers accused him of encouraging damaging inflation, making it easier to ignore deficits and doing more harm than good to the economy.
Committee Chairman Jeb Hensarling (R-Texas) set the tone early, asking as a first question for Bernanke to admit to "being human and being fallible." Bernanke agreed that he was capable of making mistakes.
"For diminishing marginal benefits, the Federal Reserve’s unconventional strategy creates considerable risks," he said in a statement.
Other Republican lawmakers accused Bernanke, by pushing down rates, of allowing the Obama administration to get away with greater deficits than the public would typically tolerate.
"Isn't the Fed's policy, in essence, masking the trust cost of our debt?" asked Rep. Patrick McHenry (R-N.C.).
And others still lambasted Bernanke, arguing that those low interest rates were wreaking havoc on seniors and savers who normally rely on interest income that now have to grapple with extremely low rates of return.
"It's eating the lunch of our seniors, who can't afford to fill their fuel tanks and buy groceries," said Rep. Steve Pearce (R-N.M.), who actually invited Bernanke to attend a town-hall meeting with him back in his district.
"At some point, it would be nice for you to get out among people who have manure on the bottom of their boots," he said.
Bernanke said Pearce was free to check with his scheduler to see if such an arrangement would be possible.
While some Democrats had their own critiques for Bernanke, they largely spent the hearing on other matters or defending Bernanke's record.
Rep. Maxine Waters (D-Calif.) said she was surprised to find herself playing the role of a Bernanke backer, noting that she did not always see eye-to-eye with the Fed chairman. And Rep. Carolyn Maloney (D-N.Y.) said the nation owed him a "debt of gratitude" for his work.
"You took unprecedented measures that took our economy that was in a total free fall, and we are now on the road to recovery," she said.
For his part, Bernanke echoed many of the comments he made a day earlier before the Senate Banking Committee. He dismissed such critiques raised by GOP lawmakers and other skeptics, and argued that the Fed was doing all it could to support a slow-moving economic recovery and had all the tools it needed to unwind its support when the time comes.
He again touted the positive impacts the Fed's moves have had on the economy and for average Americans, highlighting historically low rates on mortgages as boosting the housing market, for example.
"In a lot of dimensions, we have, I think, benefited Main Street, and that is certainly our objective," he said.
Bernanke also reiterated his call for Congress to find some way to rein in the deficit in a less damaging fashion than the automatic sequestration cuts set to take effect Friday. He contended that the $85 billion in automatic cuts would take a significant chunk out of economic growth in 2013, while doing nothing to address the long-term drivers of the nation's debt and deficits.
"I'm not saying we should ignore the deficit," he said. "From the perspective of our recovery, a more gradual perspective would be constructive."
However, even Bernanke's call for Congress to replace sequestration was met with GOP grumbling, as members accused Bernanke of putting off fiscal responsibility.
"Whenever we try to cut spending, you come at us, saying, 'Don't cut spending today! No, no, no, cut tomorrow!'" said Rep. Sean Duffy (R-Wis.).
Bernanke's argument for more gradual cuts was buttressed by his continued concern about the slow pace of the economic recovery. While the economy is expanding, it had failed to significantly bring down the nation's unemployment rate. The Fed has committed to keeping interest rates near zero until the unemployment rate dips below 6.5 percent, which could be still several years away, according to Bernanke.
He said a "reasonable guess" for when unemployment could fall below 6 percent would be 2016.