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In boost for GOP plan, Fed chief says cuts won’t derail recovery

Federal Reserve Chairman Ben Bernanke says a plan from House Republicans to cut $61 billion in spending this year would not harm economic growth.

The GOP’s proposed spending cuts, passed as part of a continuing resolution, would probably reduce “growth on the margins” and lower gross domestic product by only one- or two-tenths of a percent, Bernanke told the Senate Banking and Urban Affairs Committee.

The Fed chairman’s estimate contrasts with recent reports from Goldman Sachs and Moody’s Analytics that predicted economic harm from a $61 billion spending reduction.

The Goldman Sachs report released last week predicted that the Republican spending cuts would slow growth by as much as 2 percentage points in the second and third quarters of this year. Senate Democrats pounced on the analysis to argue that Republicans were trying to “drag our economy back into a recession.”

But Bernanke said that analysis is off the mark.

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

Full Story: In boost for GOP plan, Fed chief says cuts won’t derail recovery – The Hill’s On The Money

  • GeniousIQ

    Bernanke is fine with any cuts as long as they don’t slow the flow of tax payer money into the pockets of the bankers and investors.

  • kingfish

    Bernanke is in the news every morning before breakfast. It would be nice never to see his lying, thieving face again. Even the G20 call him “clueless”. But “clueless” is true for Obama and his entire cabinet, his czars and every single extremist he’s nominated for any office. Americans need to jettison this whole Nazi regime off to never-never land where they belong.