Bernanke: Budget Cuts Could Cost 200K Jobs
Reuters reports:
Federal Reserve Chairman Ben Bernanke said on Wednesday a Republican spending cut plan would not cause a big dent to U.S. economic growth, but could cost around 200,000 jobs.
Bernanke said that a $60 billion cut along the lines being pursued by Republican in the House of Representatives would likely trim growth by around around two-tenths of a percentage point in the first year and one-tenth in the next year.
"That would translate into a couple of hundred thousand jobs. So it's not trivial," he said in response to questions from members of the House Financial Services Committee.
The Republican-run House has passed a budget bill for the current fiscal year that includes $61 billion in spending cuts, but majority Democrats in the Senate say the reductions would endanger the economic recovery.
Any spending legislation must be approved by both chambers of Congress before it can become law.
Members of Congress are locked in a bitter fight over the budget, with Republicans, spurred on by Tea Party fiscal conservatives, having made deep spending cuts and immediate deficit reduction a top priority.
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