The Senate confirmed Ben Bernake today as Chairman of the Federal Reserve. He replaces Alan Greenspan, who has stepped down after more than 18 years guiding the nation’s monetary policy. Bernake was confirmed by voice vote.

Washington Post: Federal Reserve Raises Interest Rate; Bernake Confirmed as Next Chairman

The Fair Taxes for All Coalition has released new talking points on Congress' plan to cut the budget and pass new tax cuts. The talking points cover the new deficit projections, the possibility of extending capital gains and dividends cuts, and this year's new tax cuts.

Additionally, OMB Watch is happy to welcome on to the scene a new blog devoted to budget, tax, and economic issues. The blog is being run by the Center for American Progress economic team, and unlike this blog, it is interactive (which means you can post comments). We hope you continue to read OMB Watch's budget blog, and check out our competition once in a while, too.

The Center on Budget and Policy Priorities and the Economic Policy Institute have released a study called "Pulling Apart: A State-by-State Analysis of Income Trends." The study examines income inequality and finds that the gap between the highest-income families and poor and middle-income families grew significantly between the early 1980s and the early 2000s. The study finds that during this time, the incomes of the bottom fifth of families grew more slowly than the incomes of the top fifth of families in 38 states. The incomes of the rich grew by an average of 62 percent, while the incomes of the poor grew by an average of 21 percent. Additionally, in 39 states the incomes of the middle fifth of families grew more slowly than the incomes of the top fifth of families.

Jared Bernstein, Senior Economist at the Economic Policy Institute, noted:

When income growth is concentrated at the top of the income scale, the people at the bottom have a much harder time lifting themselves out of poverty and giving their children a decent start in life. A fundamental principle of our economic system is that the benefits of economic growth will flow to those responsible for their creation. When how fast your income grows depends on your position in the income scale, this principle is violated. In that sense, today’s unprecedented gap between the growth of the typical family’s income and productivity is our most pressing economic problem.

A synopsis of the study can be read here.

Additionally, even though the economy expanded for the fourth consecutive year (which President Bush will no doubt mention ten or twelve times during his State of the Union next week), the state of jobs and wages is another story. Real hourly wages fell for most low- and middle-wage workers by 1 - 2 percent last year. See the Economic Policy Institute's JobWatch bulletin for more information.

Last April Congress called for an increase in the debt limit -- the national debt is expected to hit $8,184 billion in mid-February -- however they have yet to act. Lawmakers are expected to take up the issue in February after voting on final tax and budget reconciliation bills, marking the fourth time during President Bush's presidency the debt limit has needed to be raised. In a recent letter to Congress, Secretary of the Treasury John Snow said that unless the debt ceiling is raised by mid-March, "we will be unable to continue to finance government operations."

Raising the debt ceiling has no immediate economic consequences, but instead indicates the instability of Bush and Congress' long-term fiscal policy. In 2010 the national debt is forecasted to be 70 percent of GDP. And pressure for the government to spend will only grow more as baby boomers retire and place new demands on both Social Security and Medicare. As Douglas Holtz-Eakin, former head of the Congressional Budget Office stated,"It's not where we are. It's the trajectory we're on." Lawmakers need to put an end to their reckless spending -- Bush's 2001 and 2003 tax cuts alone are costing the country hundreds of billions of dollars every year -- so that we can put an end to this downward spiral of fiscal irresponsibility.

Here is how the debt limit has been increased during the Bush presidency:

• June 2002: ceiling raised from $5.95 trillion to $6.4 trillion
  
  
• May 2003: ceiling raised to $7.4 trillion
  
  
• November 2004: ceiling raised to $8.184 trillion

Over the past fifty years lawmakers have raised the ceiling over seventy times, however never by the amounts quite like we have seen over the past four years.

The Congressional Budget Office released the Monthly Budget Review on Friday, in which they reported the federal budget deficit for the first quarter of 2006 as being $119 billion. This figure is fairly close to the shortfall seen in the first quarter last year.

Increased spending in the wake of the hurricanes was responsible for some of the deficit, however those outlays were countered by somewhat high corporate tax receipts. Most corporations make their quarterly corporate income tax payments in December, which makes it a good month for the federal budget.