WASHINGTON — Federal Reserve Chairman Ben Bernanke on Thursday tried to reassure U.S. soldiers, a group hit hard by high unemployment, that the Fed is working to strengthen the economy.
In a speech at a military base in El Paso, Texas, Bernanke told the soldiers and their families that the Fed is trying to lower unemployment. He talked about the Fed’s policies of keeping short-term rates near zero and buying securities to try and lower longer-term rates, such as mortgages.
Many veterans of the Iraq and Afghanistan wars are returning home to find few jobs and limited prospects. The unemployment rate for veterans of those wars was 12.1 percent in October. That’s up from 10.6 percent a year ago and well above the national average of 9 percent.
“I’m here because the men and women in military service, like all Americans, are profoundly affected by the economic challenges our nation has faced these past several years,” Bernanke said during the speech at Fort Bliss, the country’s largest Army base.
The town hall meeting was the latest in a series of public outreach efforts Bernanke has made to underscore the efforts the central bank is pursuing to help ordinary Americans cope with the Great Recession. Over the past 2½ years, Bernanke has attended half a dozen informal gatherings in Kansas City, Atlanta, Cleveland and other cities.
Before the town hall meeting, Bernanke showed up at the base airport at 3 a.m. to greet a group of 250 returning soldiers from Iraq. It marked the first appearance by a Fed chairman at a military base in recent memory.
Fed officials say Bernanke chose the location because he wanted to highlight the base’s successful financial literacy program.
First trip to Texas since Perry warning
It was also Bernanke first trip to Texas since Gov. Rick Perry warned that the Fed chairman would be treated “ugly” if he continued to pursue a policy of ever-lower interest rates. The Fed chairman has never responded to Perry’s comments. But some Fed watchers say the trip was Bernanke’s way of showing the Fed is independent.
Only one question during the hour-plus-long event touched on criticism of the Fed. One officer asked about Rep. Ron Paul’s call to abolish the Fed. Paul, a congressman from Texas, is also seeking the Republican presidential nomination.
Bernanke said such a move would really not be feasible, but he didn’t say why.
Most economists agree that the Fed serves a vital role. It controls inflation and limits unemployment by managing the size of the U.S. money supply.
Bernanke did note that when the country was on the gold standard, it faced more problems with inflation and financial crises than it does now.
Last week, the Fed downgraded its economic outlook for the next two years and said that it does not expect the unemployment rate to fall significantly through the end of next year.
President Barack Obama is pushing for tax credits of up to $5,600 to businesses that hire a veteran who has been unemployed for six months or more. Another tax credit would provide $9,600 for companies that hire an injured vet who has been unemployed that long.
The Senate is expected to take up the tax credits as part of broader legislation. The tax incentives cleared the House last month and are not expected to be paid for through Obama’s proposed tax on millionaires, raising hopes that could win Republican support.