Fed’s Bernanke: GOP Budget Ax Won’t Hurt Economy

Tuesday, 01 Mar 2011 05:31 PM

By David A. Patten

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink
Federal Reserve Chairman Ben Bernanke threw budget-cutting Republicans a lifeline Tuesday, telling Congress that the GOP’s proposed $61 billion in budget cuts would have a negligible impact on the economy and unemployment.

Bernanke’s testimony stands in direct contrast to two earlier reports by Goldman Sachs and pro-stimulus economist Mark Zandi, which both warned a reduction in federal spending could cause major damage to the economy.

Zandi, in fact, predicted that GOP budget cuts could cost 700,000 jobs. Bernanke says the Fed’s model show the number of jobs lost would be far less than that.
 
Bernanke,Federal Reserve Chairman,GOP,budget cuts,Mark Zandi,Goldman Sachs,GDP, debt ceiling, tax code
Ben Bernanke
Lower spending, Bernanke told senators, would only affect “growth on the margins.” He said it could cut GDP by one- or two-tenths of a percentage point.

Republican leaders hope Bernanke’s testimony to the Senate Banking and Urban Affairs Committee will squelch the Democratic talking point that any reductions in federal spending would force hundreds of thousands of workers onto the unemployment rolls.

Bernanke was especially critical of a recent Goldman Sachs analysis that GOP spending reductions could cut GDP by as much as 2 points in the second and third quarters of this year.

“Two percent is enormous and would be based on $300 billion in cuts,” Bernanke told the panel. “Sixty billion to $100 billion isn’t sufficient to create that kind of effect.”

Democrats have been pointing to the Goldman Sachs and Zandi reports, to argue that GOP budget cutting would stall the economy.

Bernanke also encouraged senators to reform the tax code, and said the debt ceiling must be raised in coming months to fund ongoing government operations.

"Not increasing the debt limit is like saying you're going to solve your family's debt problems by not paying your credit card bills," Bernanke said.

Bernanke also told the senators that the rising cost of oil does not yet pose a major threat to the economic recovery.

But he warned that, “Sustained rises in the prices of oil or other commodities would represent a threat both to economic growth and to overall price stability.”









© 2014 Newsmax. All rights reserved.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Retype Email:
Country
Zip Code:
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
You May Also Like

Mali's Islamists Withdraw Cease-Fire Pledge

Friday, 04 Jan 2013 13:06 PM

Tens of thousands of Fatah supporters rallied in the Hamas stronghold of Gaza on Friday for the first time since they we . . .

Fmr. CIA Director Hayden: Iran Nuclear Crisis Gets 'Scarier'

Tuesday, 17 Jul 2012 18:11 PM

 . . .

Join Fmr. CIA Director for Special Iran Briefing, Assess the Danger

Friday, 13 Jul 2012 12:27 PM

 . . .

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved