March 3, 2011
-- by Dave Johnson
While Congress and the administration -- having just passed huge tax cuts for the wealthy -- fight over which of the things government does for We, the People to cut and by how much, the rest of us are looking at how many of our jobs this will cost. Will it be a cool million, "only" 200,000, or 700,000 more of us who will lose our livelihoods?
Goldman Sachs issued a report saying the cuts will shave 2 points off GDP (which translates to at least a million jobs). ABC: Goldman Sachs: House Spending Cuts Will Hurt Economic Growth,
“the drag on GDP growth from federal fiscal policy would increase by 1.5pp to 2pp in Q2 and Q3 compared with current law.”
Moody's Analytics says the cuts will cost 700,000 jobs. Politico: Report: House budget plan could kill 700K jobs
Republicans’ efforts to cut billions of dollars from the federal budget between now and October could cost the country as many as 700,000 jobs by the end of next year, a nonpartisan economic analysis released Monday found.
... Moody’s chief economist, Mark Zandi, projected that the House proposal would cut real GDP growth by 0.5 percent in 2011 and 0.2 percent in 2012. That, in turn, would lead to 400,000 fewer jobs being created than expected by the end of this year and a total of 700,000 fewer jobs by the end of 2012.
The Chairman of the Fed says "only" 200,000 of us will be cast out of the economy. Ben Bernanke: GOP’s plan will cut jobs
Federal Reserve Chair Ben Bernanke said Wednesday that House GOP’s 2011 spending plan would likely cost “a couple hundred thousand jobs,” a number he called “not trivial.”
The Wrong Direction
So will these cuts cost 200,000, 700,000 or a cool million jobs? Either way it is the wrong direction. This chart shows last year's private sector job growth. 1.3 million total -- not even enough to keep up with the new people entering the labor pool. Congress and the administration are discussing whether to knock 200,000, 700,000 or a cool million off of that, instead of how to create new jobs and grow the economy.
Note the obvious effect of the stimulus and the end of the stimulus on the jobs picture. And keep in mind that this is with the Fed holding interest rates at or, with various schemes, below zero. You can picture what these cuts and resulting job losses will do. Will they tip us back over the cliff?
Budget Cuts Make Budget Problems Even Worse
Isaiah Poole, writing in Impact Of GOP's Job-Killing Budget Cuts: 700,000 Jobs Lost, points out that this will just make the budget problems worse:
Mark Zandi of Moody's Analytics today confirms what several other experts are saying about the slash-and-burn budget antics of House conservatives: The budget cuts being pushed by House Speaker John Boehner and the Tea Party-possessed House of Representatives will not put people back to work, They will put people out of work.
[. . .] The bottom-line message: The conservative proposals to cut programs vital to stimulating the growth of the new economy while maintaining wasteful subsidies of old-energy businesses will send the economy backwards and put people out of work—and in doing so make our budget problems worse.
Future Jobs Outlook Even Worse Than That
P.S. As for future jobs, EPI points out , which come out of the investment we make today, EPI notes: Public investments near 60-year low
Public investment—which includes strategic investments such as education and infrastructure—are near a 60-year low as a share of gross domestic product (GDP). As the Recovery Act recedes, the already low investment share is likely to fall below the historic nadir. Increasing these investments, as President Obama has proposed, is long overdue and will lead to immediate job creation, long-run global competitiveness, and economic growth.
March 10 Summit on Jobs and America's Future
On March 10, 2011, the Summit on Jobs and America’s Future will bring together leaders and activists who understand that America faces a jobs crisis – and who are committed to building a political movement for sustainable economic growth, dynamic job creation, and a revival of the American economy.
Posted by Dave Johnson at March 3, 2011 3:13 PM
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