With a government shutdown averted for the moment, House Republicans are looking ahead to the next opportunity they have to extract further damaging spending cuts from Democrats: the necessary act of raising the nation’s debt ceiling and the fiscal 2012 budget. The House is planning to bring House Budget Committee Chairman Paul Ryan’s (R-WI) budget to the floor this week.
In a preview of that budget battle, House Republicans are promoting their 2012 budget outline as a “jobs budget”:
SPEAKER JOHN BOEHNER (R-OH): The Path to Prosperity is a powerful blueprint for economic growth and fiscal responsibility that will help our economy get back to creating jobs.
HOUSE BUDGET COMMITTEE CHAIRMAN PAUL RYAN (R-WI): By removing the anchor of debt that weighs down our economy and advancing pro-growth tax reforms, this budget is a jobs budget. It sends signals to investors, entrepreneurs, and job creators that a brighter future is still possible — a future in which America is still an engine of growth that leads the world.
However, the Economic Policy Institute looked at the House Republican budget and found that just one portion of it — the severe cuts to Medicaid — would result in the loss of two million jobs:
Using a standard macroeconomic model that is consistent with private- and public-sector forecasters, we find that a $207 billion cut would result in a loss of 2.1 million jobs over the next five years, or 2.9 million full-time equivalent jobs…Furthermore, the job loss would overwhelmingly be in the private economy. Medicaid has very low overhead, as about 96% of the program’s funds go toward benefits which are spent in the private sector. Assuming the 96% ratio is relatively constant across states (or at least not systematically biased in one direction), Medicaid cuts of this magnitude would result in the loss of just under 2 million private-sector jobs, or 2.8 million full-time equivalent jobs.
The discretionary spending cuts that the House Republican budget entails would also lead to further job loss, even as the national debt increases relative to current law. Ryan’s budget also wouldn’t cut the deficit by as much as Ryan claims it will, while two-thirds of the cuts he proposed come from programs that aid low-income Americans.