Yesterday, a report by Mark Zandi of Moody's Analytics warned that a Republican plan to cut $61 billion in government spending would result in 700,000 lost jobs. Zandi's findings dovetailed with a recent report from Goldman Sachs that claimed the Republicans' plan would slow economic growth by between 1.5 percent and 2 percent. Today, though, Federal Reserve Chairman Ben Bernanke said that it actually wouldn't be that bad.
During a Senate Banking Committee hearing, Bernanke contested both the Goldman and the Moody's findings, saying the GOP plan would only reduce GDP by one or two tenths of a percentage point. "I'd like to see their analysis," Bernanke said of the 2 percent figure cited by Goldman. As for Zandi's 700,000 lost jobs, Bernanke said, "I don't have that number, but it would be certainly much less than 700,000."
It's worth noting that Bernanke isn't some anti-spending hardliner--far from it. At numerous times over the past two years, he's argued that Congress needs to be able to spend generously in order to stimulate the economy. He was making this case in March 2009, for example, and in July 2010, and again in December 2010. So when he says that "Congress needs to address the budget deficit over a 5- to 10-year window," and calls for a deficit reduction of 2 to 3 percent over the next decade, it's probably based on something other than ideology.