The debt ceiling deal signed into law Tuesday by President Obama could lead to nearly 2 million fewer jobs in 2012, The Economic Policy Institute (EPI), a nonprofit Washington D.C. think-tank has revealed.
According to the EPI, the spending cuts in 2012 and the failure to continue the payroll tax holiday and emergency unemployment benefits for the long-term unemployed, could lead to roughly 1.8 million fewer jobs next year. (See Table Below)
The agreement will reduce spending by about $1 trillion over the next 10 years through budget caps and on non-mandatory programs, with additional cuts of $1.5 trillion to come from recommendations of a joint congressional deficit reduction committee.
Although the bulk of the spending cuts are back-loaded, the EPI stated that the near-term cuts would still have an immediate impact.
With $30.5 billion in spending cuts coming next year, growth is expected to contract by 0.3 percent, resulting in roughly 323,000 fewer jobs, the EPI said.
The debt deal, “not only erodes funding for public investments and safety-net spending, but also misses an important opportunity to address the lack of jobs,” the EPI stated.
