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As Bernanke Tapped for a Second Term, U.S. Deficits Appear Likely to Soar

Judy Woodruff speaks with journalists about federal deficit projections and President Obama's nomination of Federal Reserve chief Ben Bernanke for a second term.

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    President Obama nominated the chairman of the Federal Reserve, Ben Bernanke, to a second term today. The Bernanke vote of confidence happened at the same time two government reports projected much higher budget deficits over the next 10 years.

    Judy Woodruff has our lead story.


    The man next to me, Ben Bernanke, has led the Fed through one of the worst financial crises that this nation and the world has ever faced.


    The president picked the middle of his family vacation on Martha's Vineyard to break the news.


    As an expert on the causes of the Great Depression, I'm sure Ben never imagined that he would be part of a team responsible for preventing another. But because of his background, his temperament, his courage and his creativity, that's exactly what he has helped it to achieve.


    I'd like to express my gratitude to President Obama for the confidence he's shown in me with this nomination and for his unwavering support for a strong and independent Federal Reserve.


    The White House timing of the announcement diluted the sting from some bad news released today. The president's budget director projected record high deficits for the next decade of $9 trillion, $2 trillion higher than earlier estimates.

    Meanwhile, the Congressional Budget Office projected $7.4 trillion deficits over 10 years. The lower figure factors in the 2011 expiration of the Bush-era tax cuts for wealthy Americans. Both forecasts said the unemployment rate would rise to 10 percent and remain there through next year.

    Chairman Bernanke's current term ends next January. He will need to be confirmed again by the Senate in order to serve a second four-year term. The president said he had earned it.


    Ben approached a financial system on the verge of collapse with calm and wisdom, with bold action and out-of-the-box thinking that has helped put the brakes on our economic freefall.

    And almost none of the decisions that he or any of us made have been easy. The actions we've taken to stabilize our financial system, to repair our credit markets, restructure our auto industry, and pass a recovery package have all been steps of necessity, not choice.


    But those choices have brought Bernanke criticism as well as praise. The Fed did little to rein in mortgage lending practices that contributed to the housing market's collapse and the credit crisis.

    Bernanke helped shepherd the rescue of one investment bank, the failing Bear Stearns, and last fall was involved in the decision to let another, Lehman Brothers, go into bankruptcy. He was also involved in Bank of America's controversial acquisition of Merrill Lynch.

    He later pushed for the congressionally approved large bank bailouts of last fall. The Fed pumped an additional $2 trillion into the banking system to stabilize it. And through it all, Bernanke has kept interest rates at record lows, near zero.

    This morning, the chairman spoke of his decisions as he looked forward.

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