SgtMeowenstein
Rookie
- Feb 2, 2011
- 627
- 67
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- Banned
- #1
A new report by Moody's economist Mark Zandi, says the House GOP's proposed cuts could cost 700k jobs and hurt the already unsteady recovery. This new report follows another report by Goldman Sachs, which says the GOP spending cuts would slow growth by 2 percentage points in the second and third quarters of this year.
GOP spending plan would cost 700,000 jobs, new report says
The report, by Moody's Analytics chief economist Mark Zandi, offers fresh ammunition to Democrats seeking block the Republican plan, which would terminate dozens of programs and slash federal appropriations by $61 billion over the next seven months.
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.
Zandi also had bad news for liberal Democrats who are resisting sharp spending cuts: Bringing deficits down to sustainable levels will require more than a growing economy. Even if the economy recovers as expected, he writes, lawmakers will have to cut about $400 billion a year through the rest of this decade to narrow the gap between spending and revenue, and stop adding significantly to the national debt.
"Significant government spending restraint is vital, but given the still halting economic recovery, it would be counterproductive for that restraint to begin until the economy is creating enough jobs to bring down the still very high unemployment rate," Zandi writes. "Shutting the government down for any length of time would also be taking a big chance with the recovery, not only because of the disruption to government services, but also due to the potential hit to the fragile collective psyche."
Lawmakers are facing a Friday deadline to approve a new measure to fund the government through the remainder of this fiscal year; the current funding bill is set to expire. Republicans insist the new measure should include deep cuts; Democrats say they are willing to cut spending this year, but not nearly as much.