WASHINGTON, DC - October 20, 2008 - This morning, Congresswoman Niki Tsongas flew back from Massachusetts to participate in a Budget Committee hearing with Chairman of the Federal Reserve Ben Bernanke.  The purpose of the hearing was to discuss measures to grow the economy and create jobs both in the near and long term.  At the hearing, Bernanke endorsed an economic stimulus package as one means to jump-start the economy, saying "With the economy likely to be weak for several quarters, and with some risk of a protracted slowdown, consideration of a fiscal package by the Congress at this juncture seems appropriate." 

Congressional leaders have begun to discuss an economic recovery package which might include an extension of unemployment benefits, infrastructure funding, as well as other initiatives to restore consumer and investor confidence. 

At today's hearing, Tsongas indicated that she would push for additional relief for cities and states in any stimulus package that Congress might consider, noting the severe impact on services that the economic downturn has had on Massachusetts and local communities.  Below is a transcript of Congresswoman Tsongas' testimony and the answers that she received from Chairman Bernanke, as well as a video clip of their exchange provided by CNBC. 

TSONGAS: Thank you for your service, as you've heard from all of us, in this time of tremendous turmoil and uncertainty.

I, too, like Mr. McGovern, just returned from Massachusetts this morning and, as you know and as he indicated, our state has experienced tremendous fiscal stress, with a shortfall in its budget of over $1 billion.

And the governor and legislature are working to address it, but you can imagine it's a most difficult time.

My question really is, as they work to make significant cuts that will reduce services both within state government, across our communities and the many organizations, nonprofit and otherwise, that are affected, if this doesn't simply serve, in the end, to further weaken the broader economy and if we wouldn't be wise to consider some relief in a next stimulus package.

BERNANKE: From a spending perspective, to the extent that relief leads the states and localities to restore services, to conduct greater maintenance and those sorts of things, it does contribute to demand and would be part of a stimulus package.

You don't want to be in a situation where you're compensating them for past spending or putting money in the rainy day fund, because that doesn't help the current situation in terms of spending and activity.

I reiterate what I said before, which is that one way to approach this, one problem that they're facing now, as you well know, is that the municipal bond markets are not functioning well and they're facing very high interest rates and finding it very difficult to obtain credit.

So addressing that issue might be one way to be of assistance to states and localities.

TSONGAS: Well, it's my understanding that if we were to include some relief in a stimulus package, that it would address the -- that there wouldn't be enough to really make up for all the shortfall across the board throughout the many state governments.

So that it really would be more just a way of helping to avoid some of the really dramatic cuts that are going to have to take place.

Thank you.

Hearing video: http://www.cnbc.com/id/15840232?video=896683101&play=1

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