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Bernanke: US economy could be hit by shocks from higher taxes next year
Federal Reserve Chairman Ben Bernanke testifies on Capitol Hill in Washington, Feb. 2, 2012, before the House Budget Committee. THE CANADIAN PRESS/AP, Carolyn Kaster
WASHINGTON - U.S. Federal Reserve chairman Ben Bernanke is urging senators to resolve debates over tax cuts that expire this month and at the end of the year, saying uncertainty around both could slow the U.S. economy.
Bernanke tells a Senate panel that he agrees with an analysis by the Congressional Budget Office that growth would slow to 1.1 per cent next year if the so-called Bush tax cuts expire.
He also says the economy would be hampered if a Social Security tax cut expires at the end of this month.
The tax cuts hinge on a debate over trimming the federal deficit, which is projected to run above $1 trillion for the fourth straight year.
Democrats want to increase taxes on the wealthy. Republicans oppose that approach and want to focus on spending cuts.
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