Day: February 20, 2011
The Tea Party’s Job-Killing Budget Bill
The House tea party caucus put its dominance over Speaker John Boehner on display last week when it pushed him and his hapless leadership team to the edge of the political ledge on the issue of budget cuts.
Here’s the Economic Policy Institute’s analysis on Friday of the ramifications of the tea party cuts were they to be enacted:
After the House Appropriations Committee detailed $74 billion in cuts last Wednesday, a number of conservative members demanded $26 billion in additional cuts to make good on the “Pledge to America,” bringing the total level of cuts relative to President Obama’s FY 2011 budget request to $100 billion. A full $100 billion cut to discretionary spending would likely result in job losses on the order of 994,000, using OMB’s GDP projections (CBO’s projections are based on current law) and assuming a fiscal multiplier of 1.5.
The new GOP budget proposes cutting non-security discretionary spending by $81 billion relative to the president’s $478 billion request for 2011. Non-security discretionary cuts of this magnitude would likely result in job losses of just over 800,000. (2/15/2011)
But over the weekend, looking at the bill as passed, the Associated Press reported that it called for $60 billion in cuts, which, if so, would represent a significant defeat for the tea party caucus. Even at that level, the cuts will likely produce direct job losses of 650,000 in government layoffs, which would likely trigger to another 325,000 layoffs, mostly in the retail and service sectors — nearly 1 million jobs altogether — according to an analysis by the Center for American Progress.


