Fed Chairman Ben Bernanke painted a dire picture of what might happen if lawmakers don't find a way to resolve their differences over taxes and spending before the country reaches the so-called fiscal cliff, my colleague Catherine Hollander reports from today's Senate Banking Committee hearing.
"U.S. fiscal policies are on an unsustainable path, and the development of a credible medium-term plan for controlling deficits should be a high priority," Bernanke told the committee. "At the same time, fiscal decisions should take into account the fragility of the recovery."
The chairman pointed out two areas of concern for the economy, Hollander, writes: the loss of the recovery's momentum and the risks posed by Europe's struggling economy.
Bernanke did not commit to another round of bond-buying, known as quantitative easing, and he cited other kinds of purchase programs and a reduction in rates among other arrows in the Fed's quiver.
Read Hollander's report here.