Bernanke said the spending bill would cost 'about a couple hundred thousand jobs.' Bernanke: GOP's plan will cut jobs

Federal Reserve Chair Ben Bernanke said Wednesday that House GOP’s 2011 spending plan would likely cost “a couple hundred thousand jobs,” a number he called “not trivial.”

Bernanke’s testimony Wednesday was more specific than what he offered Tuesday before a Senate committee, in which he said he couldn’t put a number on the number of jobs the GOP spending package would eliminate.


His comments buttress House Democrats’ warnings that the bill will put people out of work.

“Our sense is that the 60 billion dollars cut spread out in the normal way would reduce growth. But we think given the size it’s one to two tenths [of a percentage point reduction to gross domestic product], about a couple hundred thousand jobs,” he told the House Financial Services Committee. “It’s not trivial.”

Bernanke has been cautious in trying to estimate how the Republicans signature measure will affect jobs. He told the Senate Banking Committee Tuesday that the measure would reduce the country’s gross domestic product, but not in the drastic way that some economists have predicted.

Moody’s economist Mark Zandi said the bill would slash 700,000 jobs, while Goldman Sachs estimated it would cut GDP by 2 percent.

Democrats seized on those numbers. “We have been in session about seven weeks,” House Minority Leader Nancy Pelosi said Monday. “Republicans are losing about 100,000 jobs a week by their own legislation.”

Speaker of the House John Boehner’s office dismissed the Moody report. “The fact that a relentless cheerleader for the failed ‘stimulus’ - which the Democrats who run Washington claimed would keep unemployment below eight percent - refuses to understand that ending the spending binge will help the private sector create jobs is sad, but not surprising,” said Michael Steel, a spokesman for House Speaker John Boehner.