CNBC On Bernanke's "Difficult Choices" Appearance


This afternoon--Congress is mulling over how to proceed, after Fed Chairman Ben Bernanke warned that the U.S. economy could be gravely hurt if Social Security and Medicare aren’t revamped. In his testimony before the Senate Budget Committee, Bernanke also said that economic growth alone is unlikely to solve the nation's impending fiscal problems.

"Fixing the problems," Bernanke said, "will take persistence and a willingness by Congress and the White House to make difficult choices." Of recent projected improvement in the deficit, Bernanke says it may be the "calm before the storm." CNBC's Mark Haines, and the CNBC team provided instant analysis of Bernanke’s testimony and what it means for investors.

(Be sure and go to our video page to see excerpts of Bernanke's testimony)

CNBC’s Chief Commentator Bill Seidman called Bernanke's presentation brilliant, because "He answered what he wanted to answer but didn’t talk about policy questions." Mark Haines noted that Bernanke wasn’t cryptic or arcane (as compared to Alan Greenspan ) and that he was easy to understand, even compelling in the way he spoke.

"I think he really has a professors approach to things," added Seidman. He wants people to understand what he’s talking about."

“He has been right on the economy ever since he’s been there,” observed Seidman.(Bernanke said that inflation was not going to be a major influence, and that housing was going to be weak, but it would not bring the whole economy down) "So people are listening to him much more carefully because his record has been very good.”

CNBC Senior Economic Reporter, Steve Liesman noticed that there weren’t any questions on the economy from the Senators and that Bernanke referenced something called Libertarian Paternalism, a concept that’s been tossed around Wall Street lately. “It means…the government will make you do the right thing if you don’t want to do it,” explained Liesman.

Bernanke used it in reference to forced savings saying in effect, if workers are asked whether they want to contribute to a 401K plan they often decline. But if workers are put in a 401K plan automatically and asked if they want to opt out, they tend not to.

Seidman said, “Bottom line – not a lot of surprises (in his testimony) but a great performance!”

Here's how the Dow, NASDAQ and S&P 500 are trading following Bernanke's speech.

S&P 500