"House Republican Plan For 2008 Spending Levels Could Cost Almost 600,000 Jobs"
This vote, of course, comes on the heels of a campaign which the Republicans made “where are the jobs?” their mantra. As I noted earlier, they followed up that campaign by bringing multiple pieces of legislation to the floor that had nothing to do with job creation, while proposing to cut job training programs. But the discretionary spending cut they voted for today would be even worse for job creation.
In fact, as the Economic Policy Institute calculated, “making these cuts to the discretionary budget would reduce the number of jobs available significantly,” to the tune of almost 600,000:
Okun’s rule of thumb states that when gross domestic product (GDP) declines, there is a correlating increase in unemployment. A $60 billion cut, when assigned a fiscal multiplier of 1.5, would impact GDP by roughly $90 billion for the rest of this fiscal year alone. This would result in a decline in output by a little more than one-half of a percentage point of GDP, resulting in a loss of around 590,000 jobs.
“While the GOP leadership has been busy labeling many of the opposing party’s initiatives as ‘job-killing,’ their very own proposal to cut discretionary spending for the rest of this fiscal year would have a very clear negative impact not only on important social programs, but also on our jobs picture,” wrote EPI’s Rebecca Thiess. The Republican Study Committee, in which 175 House Republicans claim membership, has released an even more destructive plan, which would cut discretionary spending back to the 2006 level and hold it there until 2021 (the RSC’s plan also, conveniently, leaves most of the specific cuts to be identified at a later date).
In addition to the lost jobs, these cuts would hack into important and popular programs that are important to long-term economic development, like Pell Grants. As the Center for American Progress’ Adam Hersh wrote, “budget policy requires careful attention to the country’s immediate economic needs — securing the economic recovery and creating jobs for the nearly 15 million people unemployed and looking for work — while ensuring we make the investments necessary for America’s long-run competitiveness and economic prosperity.” With today’s vote, the House Republicans accomplished neither.