Bernanke Vs. Zandi: What a Difference A Day Makes

Mar 2, 2011 4:34pm

ABC News’ Matthew Jaffe reports:

Federal Reserve chairman Ben Bernanke provided some fodder for both Democrats and Republicans in two days of testimony on Capitol Hill this week.

It all revolved around his take on economist Mark Zandi’s report that the House GOP’s spending bill to slash $61 billion this year would cut economic growth by 0.5 percentage points this year, 0.2 percentage points next year, and ultimately destroy up to 700,000 jobs.

“I don't have that number, but it would be certainly much less than 700,000,” Bernanke told the Senate Banking Committee on Tuesday.

Republicans promptly started to highlight the Fed chief’s comments as evidence that Zandi was wrong – the GOP plan would be nowhere near as harmful as Zandi had claimed.

On Wednesday Bernanke was back on the Hill, telling a House Financial Services Committee hearing that the GOP’s plan would lead to the loss of “a couple hundred thousand jobs.”

“It would reduce growth, but we think it's, given the size, it's more in the – a couple, one to two-tenths [of gross domestic product] in the first year, another tenth in the next year, something on that order of magnitude. And that would translate into a couple hundred thousand jobs. So it's not trivial, but I think those numbers are a little high.”

In the wake of those comments it was Democrats who highlighted Bernanke’s testimony as evidence that Zandi was right – the GOP plan would seriously hurt the economy.

Just after the hearing Jon Summers, spokesman for Senate Majority Leader Harry Reid, asked, “How many American jobs are Republicans willing to destroy?”

One thing Bernanke stated unequivocally today, yesterday, and many times before in his testimony on the Hill – lawmakers must find a way to rein in the nation’s runaway deficits.  

“We do need to move to provide confidence to lenders that we will control our deficits over time,” he told the House panel.

While both parties also emphasize that point, to date they have come nowhere near reaching an agreement on how best to do it. 

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