Bernanke warns Congress to avoid "fiscal cliff"
WASHINGTON - Federal Reserve Chairman Ben Bernanke (bur-NANG'-kee) is warning Congress and the Obama administration to strike a budget deal to avert tax increases and spending cuts that could trigger a recession next year.
Without a deal, the measures known as the "fiscal cliff" will take effect in January.
Speaking to the Economic Club of New York, Bernanke also says Congress must raise the federal debt limit to prevent the government from defaulting on Treasurys. A failure to do so would impose heavy costs on the economy. He also says Congress needs to reduce the federal debt over the long run to ensure economic growth and stability.
The Fed Chairman says uncertainty about all these issues is likely holding back spending and investment and troubling investors.