Tue. March 01, 2011
House Republicans’ plan to cut $61 billion from the federal budget could harm the economic recovery, say two independent economic analysts.
Investment firm Goldman Sachs estimates the GOP plan would reduce U.S. economic growth by up to two percent this year, while Moody’s Analytics Chief Economist Mark Zandi says the plan would lead to the loss of 700,000 jobs by the end of 2012.
“While long-term government spending restraint is vital, and laying out a credible path toward that restraint very desirable, too much cutting too soon would be counterproductive,” says Zandi. “The economy is much improved and should continue to gain traction, but the coast is not clear; it won’t be until businesses begin hiring aggressively enough to meaningfully lower the still-high unemployment rate.
