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Economist Mark Zandi of Moody's Analytics said Sunday that if all $61 billion in proposed cuts for the rest of this year were enacted, the economy's growth could be reduced by half a percentage point. Many forecasters expect the economy to grow at around 3.5% this year. By the end of the year, Zandi said, those spending cuts could cost the economy between 400,000 and 500,000 jobs. "I think it's premature to engage in that kind of budget cutting," Zandi said. "We can't do that, I don't think, until the economy is off and running." Zandi was speaking on CNN's State of the Union with Candy Crowley.
But economist Douglas Holtz-Eakin said that cuts would have a much smaller impact on growth: 2 to 3-tenths of a percentage point. "It's a rounding error," said Holtz-Eakin, who was a top economist in the George W. Bush White House and also served as director of the Congressional Budget Office. Instead, said Holtz-Eakin, who was also on State of the Union, the budget cuts could ultimately have a positive impact by reducing the fear of increases in interest rates and taxes that deficits can cause. The proposed spending cuts are "tiny," relative to the $15 trillion U.S. economy, said Holtz-Eakin. "The notion that somehow doing the right thing in this amount is going to harm us is just misplaced."
Zandi agreed that we need to address the deficits - just not yet. "We are not creating enough jobs to bring down unemployment. We need to have all the juice we can get to make sure that's happening before we go through these budget cuts." Last week, Goldman Sachs economists said the impact of budget cuts could be far worse: 1.5 percentage points to 2 percentage points in the second and third quarters. On Friday, economic growth in the fourth quarter of 2010 was revised sharply lower, to 2.8%, driven largely by budget cuts by state and local governments.
Source
In his weekly radio address, Mr Obama said economic recovery would stall if lawmakers could not agree on spending cuts before a 4 March deadline. Republicans and Democrats are trying to work out a compromise short-term budget as an interim measure. The 2012 budget proposes a $1.1tn (£690bn) deficit cut over a decade.
Although Mr Obama is empowered to propose a budget, it is up to the US Congress to pass it into law and then to distribute the funds. "Next week, Congress will focus on a short-term budget. For the sake of our people and our economy, we cannot allow gridlock to prevail," Mr Obama said in his weekly radio address.
"I urge and expect them to find common ground so we can accelerate, not impede, economic growth," Mr Obama said. "It won't be easy. There will be plenty of debates and disagreements and neither party will get everything it wants. Both sides will have to compromise," he added.
'Interim plan'
They better be real cuts.
The Democrats are just as responsible for putting us in this position as the Republicans are.Yeah they will wake up and vote the right out
They better be real cuts.
Lets do the math. Retards want to cut the budget 61 B, while the interest on the debt is 187 B
Thats like coming to dinner and eating your carrots, but ignoring the roast beef, mash potatoes and gravy. Oh, and the dinner roll with butter.
IF you are going to get serious about the budget, cut the budget.
Defeat The Debt*-* How Much?
.....FARM Subsidies!!!!!