Bernanke: Budget Cuts Will Hurt the Economy

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Fed chairman Ben Bernanke told Congress today that Republican budget cuts probably would have a modest negative effect on the economy:

Bernanke [] threw some cold water on recent studies by two leading economic forecasting groups that suggested Republicans’ proposed $60 billion budget cut would be a major drain on the economy over the coming year….Responding to questions from Sen. Jack Reed (D-R.I.), Bernanke said that the Fed’s analysis suggests smaller economic losses from the spending cuts, reducing GDP by several tenths’ of a percent and the number of jobs by “certainly much less than 700,000.”

Wait a second. According to Dana Milbank, Scott Lilly of the Center for American Progress estimates that the Republican plan would lead to the direct loss of 650,000 government jobs. If that’s the case, surely total job losses can’t be “much less” than 700,000?

In any case, it hardly matters. Maybe it’s a million jobs, maybe it’s half a million jobs. Maybe it will cost a point of GDP, maybe it will cost half a point of GDP. But considering that the economy is still sluggish and unemployment is extremely high, why are we considering budget cuts that will have any negative effect on jobs and growth? Especially cuts in the only part of the budget that isn’t a long-term problem?

That’s the big news from Bernanke’s testimony: not that he thinks other estimates of job losses are too high, but the fact that he agrees the Republican budget plan will cost jobs and slow growth. That’s coming from a Republican Fed chair! How much more evidence do we need that our current budget cutting mania is insane?

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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