A Republican proposal to sharply cut spending would lead to hundreds of thousands of job losses by the end of 2012, an independent report by Moody’s released today reveals.
According to economist Mark Zandi, while the Obama administration has show significant restraint in its recent budget, the deeper cuts desired by Republicans will reduce 2011 real GDP growth by 0.5 percent and 2012 growth by 0.2 percentage points. This would mean some 400,000 fewer jobs created by the end of 2011 and 700,000 fewer jobs by the end of 2012.
Zandi said, while tax increases and spending cuts are necessary to address the U.S. long-term fiscal deficit, too sharp cuts before the economy is in full expansion would add unnecessary risk.
Last week, a Goldman Sachs report warned that if the Republicans’ proposed budget cuts of $60 billion were implemented, the U.S. economy could slow down by as much as 2 percent.
