Ben Bernanke, the Chairman of the Federal Reserve, warned Tuesday that the fiscal cliff could be devastating to the economy's growth if Congress did not find a solution.
“Cooperation and creativity to deliver fiscal clarity — in particular, a plan for resolving the nation’s longer-term budgetary issues without harming the recovery — could help make the new year a very good one for the American economy,” Bernanke said in a speech to the the Economic Club of New York, Bloomberg Businessweek reported. “The realization of all of the automatic tax increases and spending cuts that make up the fiscal cliff, absent offsetting changes, would pose a substantial threat to the recovery.”
More from GlobalPost: What 'Fiscal Cliff?': Stocks rally on budget optimism
If Congress does not agree upon a solution by the end of their legislative session, the mandatory tax increases and spending cuts will go into effect in January.
"If the economy goes off the broad fiscal cliff, I don't think the Fed has the tools to offset that," Bernanke added.
The Fed's Chairman also said that Congress needs to raise the federal debt limit so that the government does not default on its debt to the Treasury, the Associated Press reported. If they don't, Bernanke warned of serious costs to the US economy.