Fed chairman Ben Bernanke likes to bitch about Congressional interference in Fed monetary policy yet Bernanke repeatedly tells Congress what to do regarding fiscal policy.
I think neither should tell the other what to do because the Fed should not exist at all.
With that remark out of the way, please consider Republicans, Fed Clash on Job Impact of Spending Cuts
“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.”
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.
An independent analysis released by Goldman Sachs last month found that the Republican proposal would reduce economic growth by 1.5 to 2 percentage points during the second and third quarters of this year.
Bernanke attributed the lower Federal Reserve estimates to some “differences in assumptions.”
“We’ve tried to do a realistic analysis of what those cuts would do over a couple of years,” he said.
Boehner called Zandi the “pet economist” of House Democratic Leader Nancy Pelosi of California, citing his support for an economic-stimulus bill that the White House once estimated would keep unemployment below 8 percent. Boehner cited a statement signed by 150 economists sent to President Barack Obama calling for spending cuts.
Stanford University economist John Taylor, a Treasury undersecretary under former President George W. Bush, says both Zandi and Goldman Sachs relied on a flawed methodology. He wrote that he found “no convincing evidence” that the budget-cutting bill would reduce employment or economic growth.
We have a freaking $1.4 trillion deficit and Bernanke is bitching about a Congress addressing mere $61 billion of it. Bernanke warns against attempts “to do everything immediately” hoping to spread that $61 billion out over a decade.
Bear in mind that $61 billion is a mere 4.36% of what needs to happen. Is Ben Bernanke a fiscal moron or what?
As an added bonus for those who may have missed it, please consider Hello Ben Bernanke, Meet “Stephanie”
Mike “Mish” Shedlock
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