thank you, dr. bernanke. if i look at the bills we had here on the floor over the last couple of weeks we were in session and this week, virtually everything we're doing, either authorizes or appropriates more money spending. even in many cases than what is anticipated in the charts that we have talked about today. what are the economic consequences of continuing that sort of trend? >> congressman, as i've indicated, we as a country have to make hard choices. we can't expect to continue to borrow, certainly not 12% of gdp, but not even 4% or 5% of gdp indefinitely so we need to make a plan, some decisions about how to bring the budget closer to balance over the immedia medium term. that means as you discuss spending, you need to think about the revenue sources that will be related to that. if you don't do that, then, again, you'll see interest rates rise and see reluctance of lenders to provide credit to the u.s. government. that would be a very bad outcome. and i believe there is a great deal of confidence i

and yesterday, dr. bernanke testified at our hearing and expressed his concerns over the need for congress to develop a plan to come up with a way to deal with these debts and our deficit issues. they are part of a risk that is presented to our country long-term if we don't begin to address them now. and after passing a 700-plus billion stimulus package, $1.1 trillion if you consider the interest and $410 billion budget for the current fiscal year and then approving in the budget committee over the objection of all of the republicans, a nearly $3.6 trillion budget for the next fiscal year. i firmly agree with the gentleman from pennsylvania about the concerns that we all have as freshmen republicans for the tremendous debt and the tremendous deficit that is being undertak. . i would like to ask a couple of other colleagues to join this conversation, blaine luetkemeyer of missouri, another member of the freshman republican class, who is the rarest of rare commodities in congress, in that he has operated

. >> dr. bernanke, thank you for being here today. i want to visit a bit about that balance between taxes and spending in the medium term. if congress just increases taxes to eliminate the deficit in ten years, let's say, without cutting spending, could that have an effect on our economic recovery, a negative effect? >> as i was trying to make the distinction earlier, in a economy in recession, tax cuts or tax increases have two effects. one is the incentive effects which are more long-term effects. but also withdrawing purchasing power, taking away income from consumers. and in a short-term, recessionary situation, i think that latter effect is more important. if you raise taxes during a recession, you probably want to offset it with a tax cut elsewhere, for example. over a longer period of time, you have to weigh the implications of higher taxes on incentives and on potential growth against the benefits of what you're using the revenue for. there is a cost benefit trade-off to be made there. and in particular, i think -- i believe t