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Ryan Budget Cuts Are Based on Theory Rejected by Bernanke, IMF

The jobs and housing boom promised by House Budget Committee Chairman Paul Ryan relies upon an economic theory that has been rejected by both the chairman of the Federal Reserve Board and the International Monetary Fund.

The proposal Ryan announced April 5 would make significant budget cuts starting in the fiscal year that begins Oct. 1, even as the economy contends with an 8.8 percent unemployment rate. Next year’s deficit would shrink to $995 billion from the $1.1 trillion President Barack Obama forecasts, the first step in trimming future red ink by a cumulative $4.4 trillion over 10 years. That, Ryan says, would revive housing, spark corporate investment and drive unemployment down to 4.3% by 2021.