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The Bernanke Effect? Still Unclear

Updated: 4:40 p.m.

House party leaders on Monday came away with different readings of Federal Reserve Chairman Ben Bernanke’s endorsement of a second economic stimulus package.

Minority Leader John Boehner (R-Ohio), who has been critical of another economic measure, said Republicans agree with Bernanke that lawmakers should take action to bolster the economy. But he cautioned Democrats against seeking “hundreds of billions in new government spending masquerading as ‘economic stimulus.’”

A stimulus package should “come in the form of pro-growth policies” such as offshore drilling and corporate tax cuts, Boehner added.

The Minority Leader drew attention to Bernanke’s warnings that tax increases “are the wrong approach during times of economic uncertainty.” He called on Speaker Nancy Pelosi (D-Calif.) to “work with House Republicans to stop the massive tax hike Democrats have set in motion.”

One senior GOP aide said Bernanke and Democratic leaders “have two very different ideas about a stimulus.”

“Republicans agree that the next step must be aimed at thawing the credit market, just as Bernanke does, to create an environment where small businesses can expand and families can secure needed loans for things like college,” the aide said.

House Democrats have been trying to build support for a potential $300 billion stimulus bill focused on infrastructure resources, unemployment insurance, food stamps and state Medicaid assistance. They seized the opportunity today to point out that a prominent government official is now on board with a stimulus package, something that Republicans have been reluctant to support.

“Chairman Bernanke made it clear that a new economic recovery package is critical to boost our weakening economy,” Pelosi said.

“At a time when Americans are struggling with rising costs and weakened retirement security, and a growing number of workers are losing their jobs, I call on President Bush and Congressional Republicans to once again heed Chairman Bernanke’s advice and as they did in January, work with Democrats in Congress to enact a targeted, timely and fiscally responsible economic recovery and job creation package.”

House Majority Leader Steny Hoyer (D-Md.) urged Republicans to work with Democrats “to make a targeted, fiscally responsible recovery a reality.”

“With millions of jobs and homes at risk and retirement savings endangered, passing a recovery package should be at the top of Congress’ agenda,” Hoyer said.

House Majority Whip James Clyburn (D-S.C.) added, “I’m pleased to see Chairman Bernanke join the growing chorus of economists, lawmakers and experts calling for a significant economic recovery package.”

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