Republican Spending Cuts Would Cost 700,000 Jobs, Report Says
The Moody's Analytics report, by chief economist Mark Zandi, is a bright spot for Democrats who have been fighting to block the Republicans' plans to cut dozens of federal programs and reduce agency budgets. Democrats say they're willing to make cuts but not by as much as Republicans want.
The Washington Post reports:
"Zandi, an architect of the 2009 stimulus package who has advised both political parties, predicts that the GOP package would reduce economic growth by 0.5 percentage points this year, and by 0.2 percentage points in 2012, resulting in 700,000 fewer jobs by the end of next year.
His report comes on the heels of a similar analysis last week by the investment bank Goldman Sachs, which predicted that the Republican spending cuts would cause even greater damage to the economy, slowing growth by as much as 2 percentage points in the second and third quarters of this year."
Republicans criticized Zandi and the report on Monday, pointing to his political ties as a registered Democrat and one of the $814 billion stimulus' greatest advocates.
"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.
The report also said that "a government shutdown lasting longer than a couple of weeks would do much more damage to the economy."
The Republican-dominated House of Representatives approved the desired $61 billion cuts on Feb. 19 by a vote of 235-189.
The vote was called "an early political victory" for Speaker John Boehner "as his newly empowered GOP troops lived up to a 2010 campaign pledge to trim spending levels to those before the 2008 financial crisis caused an unprecedented level of government spending and intervention into the private economy."
Boehner referred to it as "democracy in action."
Senate Democrats, led by Majority Leader Harry Reid, say they won't vote on the bill.
But lawmakers may be close to reaching a compromise as the House appears poised to pass a short-term spending bill Tuesday that would delay the deadline to pass the federal budget by two weeks and fund the government through March 18.
This bill would include $4 billion in cuts that Obama had already pinpointed for elimination including "additional highway spending ($650 million), reading instruction ($250 million), competitive grants to lower class size ($66 million), and $2.7 billion in cuts to member 'earmark' projects."
In a piece on Slate, John Dickerson wrote, "The White House wants Senate Democrats to make a deal. It cannot have a government shutdown while the economic recovery is still so fragile. Though the actual impact of a short shutdown would not be dire, it would increase uncertainty in the business community, say administration aides, sending the signal that in the bigger budget fights to come, no one in Washington can be trusted to do the right thing. Such unpredictability may cause businesses to hold on to their profits and hold off on investing or hiring new workers...Republicans, meanwhile, don't want a shutdown because they can't risk having their first big public act be that they shut down the government. Footage of Newt Gingrich will flood the airwaves... GOP leadership aides are also worried that the narrative of the shutdown stories will be that House Speaker John Boehner is too beholden to the 'Tea Party crazies.' That diminishes Boehner's stature and suggests the House is out of control."
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