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Bernanke: House GOP spending cuts wouldn't cost 700,000 jobs

Yesterday, we wrote about an estimate by Moody's economist Mark Zandi, who projected that House Republicans’ proposed spending cuts could cost the American economy 700,000 jobs through 2012.

Today, Federal Reserve Chairman Ben Bernanke said that projection is overstated.

Testifying before the Senate Banking and Urban Affairs Committee Tuesday, Bernanke said that his analysis “doesn't give a number that high” for job losses resulting from the GOP plan to eliminate $61 billion in government spending this year, adding that the cuts would only reduce growth "on the margin."

Bernanke estimated the cuts would result in the reduction of “several tenths [of a percent] on GDP"  – far less than the two percent projected in a recent report by Goldman Sachs.

A reduction in federal spending of “$60 billion to $100 billion is not sufficient to get to that level,” Bernanke said. “But it would, of course, have the effect of reducing growth on the margin, certainly.”

Democrats have been touting the Goldman Sachs and Zandi analyses, saying that the numbers prove that the GOP plan would hobble the economic recovery. Republicans countered yesterday by pointing out Zandi’s support for the stimulus plan passed by Democrats in the early days of the Obama presidency.

House Majority Whip Kevin McCarthy's office quickly circulated Bernanke's remarks to reporters Tuesday, saying that the Fed chair's comments "echoed what other economic experts have been saying for days."

"Senate Democrats should find new talking points if they're going to continue to stand in the way of House Republican efforts to eliminate barriers to job creation through much needed spending reductions," the written statement read.

*** UPDATE *** In the hearing, Sen. Chuck Schumer, D-N.Y., asked Bernanke whether or not he agreed with Zandi's statement that “cuts, significant cuts, could cause job loss.”

"The cuts would presumably lower overall demand in the economy and would have some effect on growth and employment," Bernanke responded. "Yes."

NBC's Luke Russert contributed.