U.S. Representative Kevin McCarthy thought he had an ally in Federal Reserve Chairman Ben Bernanke on the impact that Republican budget cuts will have on jobs. McCarthy, of California, the third-ranking House Republican, said this week the spending cuts won’t cost the nation jobs, pointing to Bernanke for support. Within hours, Bernanke testified on Capitol Hill that the budget reductions may lead to the loss of 200,000 jobs.
The Fed chief said the House Republican plan to slash $61 billion from 2011 government spending could also subtract “a couple of tenths” of a percentage point from U.S. economic growth over several years.
“We need to address the deficit; that’s very important,” Bernanke told the House Financial Services Committee in a March 2 hearing. “But I think it would be most effective if we did that over a timeframe of 5 or 10 years and not try to do everything immediately.”
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