Two recent stories show how Bernanke and the governor of the Bank of England understand the ongoing budget cuts and what they are doing to ordinary people. From the lede paragraph of yesterday's Politics Daily:
Federal Reserve Chairman Ben Bernanke waded into a heated Washington debate Tuesday when he predicted that federal spending cuts proposed by House Republicans would not damage economic growth to the extent that two recent reports have predicted.
An interesting analysis, considering Moody's claims that the GOP budget would cut 700,000 additional jobs from the economy and Goldman Sachs says it would slow GDP growth by up to 2% in the second and third quarter.
As you may or may not know, the UK Conservative government instigated swathing cuts across the board in spending which have slowed our economic recovery this last quarter. They are using the same excuses as the GOP of profligate spending by both the government and individuals. Cameron is also using austerity as an excuse to privatise every profit making government entity they can and hand off the remainder to charities run by volunteers. This is very much like the Republican drive to break the unions in both the public sector and the schools.
How this plays out in the English MSM is very different however. We do have more liberal newspapers like the Guardian and Independent which carry news about UK Uncut and the student protests. Even more astonishing, Mervyn King, The governor of the Bank of England, advised Parliament yesterday that "The price of this financial crisis is being borne by people who absolutely did not cause it." And the story makes the headlines. The lede paragraphs here state:
Mervyn King has risked reopening the bitter argument over blame for the financial crisis by saying that government spending cuts are the fault of the City and expressing surprise there has not been more public anger.
The governor of the Bank of England said that people made unemployed and businesses bankrupted during the crisis had every reason to be resentful and voice their protest. He told the Treasury select committee that the billions spent bailing out the banks and the need for public spending cuts were the fault of the financial services sector.
King elaborates saying that living standards here have taken a permanent hit from the recession saying, "The research makes it clear that the impact of these crises lasts for many years. It is not like an ordinary recession, where you lose output and get it back quickly. We may not get the lost output back for very many years, if ever."
At least King has placed the blame for budget cuts and the ensuing pain exactly where it belongs: on the backs of the people who profited by it. Bernanke on the other hand seems to think that cuts will only hurt the little people, and by implication that hurting the little people is just fine. "It would of course have the effect of reducing growth on the margins certainly," he said. "It would have a negative impact, but 2 percent? I'd like to see their analysis. It seems like a somewhat big number relative to the size of the cut."