he House Republicans' plan to make deep cuts to the federal budget isn't getting much love from independent economists. Last week, Goldman Sachs predicted that the $61 billion in proposed cuts would reduce U.S. economic growth by 2 percentage points this year. Then on Monday, Moody's chief economist Mark Zandi said the GOP budget would cost the U.S. economy 700,000 jobs through 2012. Is the GOP plan a job killer?
Yes, this plan is poisonous: The GOP knows that people care about jobs, not the deficit, says Steve Benen at Washington Monthly. After all, in 2010 they "ran on a 'where are the jobs' platform," and won. So why are they now "aggressively pushing a plan they know will make unemployment much worse?" Is it nothing but "politically motivated economic sabotage"? That's a debate worth having.
"The GOP plan to make unemployment much worse"
No, the forecasts are wrong: Zandi and other economists pushing these job-loss numbers are relying on the same "old-style Keynesian approach" that failed to deliver a reliable forecast for the 2009 stimulus, says Stanford economist John B. Taylor at Economics One. And they're discounting the smart theory that putting our "fiscal house in order" by closing the deficit will spur growth by getting businesses off the sidelines. If anything, we should cut more than the GOP wants.
"Goldman Sachs wrong about impact of House budget proposal"
The burden of proof is on the GOP: "I can't vouch for these numbers" from Zandi, says Jonathan Cohn in The New Republic. But I do know why John McCain's 2008 economic adviser is "now the Democrats' favorite economist to cite." Zandi's argument, that "in the midst of a recession, less government spending is almost certainly going to mean fewer jobs," is one that both Democrats and mainstream economists agree on.
"Zandi: GOP plan means 700,000 fewer jobs"
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