Should sequestration take effect Friday, Federal Reserve Chairman Ben Bernanke cautioned that in the near term these automatic cuts would be a drag on economic recovery and the already high unemployment rate. The Fed Chairman testified before the Senate Banking Committee Tuesday on the Fed’s semiannual monetary policy report and economic outlook.
Mr. Bernanke says economic activity continues to expand but at a moderate pace. On the unemployment front, despite gains, the job market remains weak.
On Sunday, the White House kicked off a week of warnings about the sequester by issuing reports on how the looming $85 billion in automatic budget will affect government programs. Last week, President Obama emphasized that he has offered what he called a "balanced approach" to deficit reduction. He called for tax reform and some additional spending cuts. The deadline for sequestration was pushed back at the beginning of the year after Congress agreed to let some of the Bush-era tax cuts expire.