A Congress that only functions when a deadline for economic disaster is closing in doesn’t just make it stressful to follow the news, it also imposes tangible harm on the country’s recovery. The reliance on crisis-driven governing since the House changed hands in the 2010 elections has already cost 900,000 jobs, according to a study commissioned by the conservative Peter G. Peterson Foundation.
The study, “The Cost of Crisis-Driven Fiscal Policy,” finds that the uncertainty created by short-term spending bills and perpetual brinkmanship around the debt ceiling, the fiscal cliff, and other manufactured crises has pushed the unemployment rate 0.6 percentage points higher than it would otherwise have been in 2013. It also cost 0.3 percentage points of GDP growth per year since 2010. The study was conducted by Macroeconomic Advisers on behalf of the Peterson Foundation, which is one of several vehicles that billionaire investor Pete Peterson uses to advance the cause of deficit reduction.
The report also finds that cuts to discretionary spending from 2011 to the present have cost the country 1.2 million jobs and 0.7 percentage points of GDP growth. About three-quarters of the $2.4 trillion in total deficit reduction enacted since the fall of 2010 was in the form of spending cuts. The Peterson-commissioned estimate of what that steep reduction in government expenditures has cost is a bit more conservative than previous estimates by other economists, but only slightly less negative.
The source of the crisis mentality in Congress is not difficult to ascertain. Republicans have hardly missed an opportunity to push the government to the verge of shutdown or default since retaking the House in the 2010 elections, attaching a list of demands each time.