Ben Bernanke waxed philosophical in testimony before the House Banking Committee yesterday. He indicated that no matter how Congress deals with the $85 billion in sequestration cuts it will have the same impact on the economy.
It doesn’t matter if you make the $85 billion in cuts as mandated, if Congress pays for them with cuts to other programs or even if Obama has his wish, and Congress raises the money by closing loopholes in the tax code that benefit the top wage earners.
All options will reduce the GDP by roughly 0.6%. It’s inevitable.
At face value, this is a pretty innocuous comment. It’s the kind of remark that only the Wall Street Journal would cover, and then on the bottom of page 35 below the obituaries.
Bernanke blew it off. It may reduce our GDP from 2.6% to 2.0%. We’ll still be growing at a decent, if tepid, pace. The “economic recovery” will stay on track.
When I read this report yesterday I thought, “Goooollleee Sergeant Carter – didn’t I just recollect the GDP was reported as minus 0.1% in the fourth quarter of 2012?”
This morning the latest revision came out on the 4th quarter GDP, plus 0.1%. The worse in five years.
Big yawn. It’s a blip in the numbers. We’ll pull out of it. Consumer spending accelerated in the last 2 months. Unlax, y’all.
The REAL issue here is how to figure the affect of Obama’s $1 trillion deficits on how we measure GDP. Obama got the $900 billion stimulus four years ago, and he’s continued to spend an extra $900 billion every year since then.
According to Bernanke, that equals a 6% affect on GDP. (If an $85 billion cut equals a 0.6% slice out of GDP then a $900 billion shot in the arm artificially escalates GDP by 6%.)
We’re still in a recession, in other words; have been ever since Obama got elected. If anything it has worsened, not improved.
We’re in a depression, is what.
