The Federal Reserve announced today that it intends to sell some of its shorter-term securities in order to buy $400 billion in longer-term Treasury notes over the next nine months- in an attempt to keep interest rates low and help stabilize the economy. The bank also said it would keep its federal funds rate (the interest rate banks charge each other for loans) at 1/4 percent for the foreseeable future. Three members of the Fed dissented from the decision.
Meanwhile on Capitol Hill the deficit reduction "super committee" continues its work - and today the New America Foundation hosted a discussion with a bipartisan group of current and former members of Congress and White House officials who urged the joint committee to "go big" and seek deficit reductions of $4 trillion or more. The target for the 12-member panel is $1.5 trillion as spelled out in the debt ceiling compromise bill.
Among those taking part in the forum: the former Chairmen of the House and Senate Budget Committees, John Spratt and Pete Domenici, former OMB and CBO Director Alice Rivlin, and the CEOs of the American Gas Association and Honeywell.
Many of the participants in today's event were among 60 leaders who signed a letter to the to deficit committee co-chairs. The letter urges them to "develop a large-scale debt reduction package...that goes well beyond the $1.5 trillion deficit reduction goal that the Committee has been charged with and includes major reforms of entitlement programs and the tax code is necessary to bring the debt down to a manageable and sustainable level."