Bernanke says it is urgently import for Congress to get budget deal to avoid fiscal cliff

WASHINGTON – Federal Reserve Chairman Ben Bernanke is warning Congress and the Obama administration to strike a budget deal to avert tax increases and spending cuts that could trigger a recession next year.

Without a deal, the measures known as the “fiscal cliff” will take effect in January.

Bernanke also says Congress must raise the federal debt limit to prevent the government from defaulting on Treasurys.

A failure to do so would impose heavy costs on the economy.

He also says Congress needs to reduce the federal debt over the long run to ensure economic growth and stability.

Uncertainty about all these issues is likely holding back spending and investment and troubling investors, the Fed chairman says.

Bernanke is addressing the Economic Club of New York.