The spending cuts in the Republicans’ budget proposal would cost the country up to 700,000 jobs and hurt the country’s economic growth, according to Moody’s chief economist. Mark Zandi estimates that the proposed budget would reduce GDP growth by 0.5% in 2011 and another 0.2% in 2012, hurting job creation, Politico reports. “While long-term government spending restraint is vital,” Zandi wrote, “too much cutting too soon would be counterproductive.”
The economy is currently adding 100,000-150,000 jobs a month. But Zandi says that until that figure hits 200,000, significantly cutting spending “would be taking an unnecessary chance with the recovery.” John Boehner scoffed at the report. “The fact that a relentless cheerleader for the failed ‘stimulus’ refuses to understand that ending the spending binge will help the private sector create jobs is sad, but not surprising,” he said. But Zandi isn’t the first economist to make the case. A Goldman Sachs analysis last week concluded that the House plan would cut economic growth by 1.5%-2% this year.