Moody's Zandi: GOP Budget-Cut Plan Would Cost 700,000 Jobs

[I Drink Water]

House Republicans’ $61 billion budget-cutting plan would cost 700,000 jobs, according to a report likely to inflame the debate over the U.S. government deficit.

The measure would reduce real economic growth this year by 0.5 percentage points and by 0.2 percentage points next year, resulting in 700,000 fewer jobs by the end of 2012, said Mark Zandi, chief economist for Moody’s Analytics.

He said budget-cutters should wait until the U.S. economy is stronger, saying Republicans “would be taking an unnecessary chance with the recovery.”

“Significant government spending restraint is vital, but given the economy’s halting recovery it would be counterproductive for that restraint to begin until the U.S. is creating enough jobs to lower the unemployment rate,” Zandi said.


*snip*

Zandi said the proposed spending cuts would come at a particularly inopportune time because the economy is under new pressure from rising oil prices, pushed upward by the unrest in the Middle East. He said the plan would also undo some of the economic boost provided by the Federal Reserve and the $858 billion tax-cut package approved in December by Congress.

http://www.moneynews.com/Economy/Moodys-Zandi-GOP-Budget-Cut/2011/02/28/id/387783