Why Dent (and the Rest of the GOP) Are Cutting at the Wrong Time
The time to trim is when the economy is healthier.
Republicans convinced voters to give them control of the U.S. House of Representatives by promising jobs and faster economic growth, but now that they are in power, jobs are nowhere on their agenda.
Last week, Goldman Sachs economists estimated that the House Republicans' 2011 budget would reduce economic growth by 1.5 to 2 percentage points in the next two quarters, compared with under current law. Economists only expect growth of 4 percent in Q3 and Q4, so this would be a major slowdown.
Center for American Progress economist Adam Hersh says such a reduction in gross domestic product (GDP) could cost 1 million jobs and send the unemployment rate back up as high as 10 percent.
On Monday, Moody's Analytics weighed in, saying that House Republicans' budget cuts would destroy 700,000 jobs through 2012.
Republicans have responded to these analyses by either ignoring them or attacking the messenger, but the evidence is clear--these cuts are going to hurt the economy and cost jobs, and they won't so much as put a dent in the deficit.
The Lehigh Valley's Republican Congressman, Charlie Dent, did some interesting political contortions during the budget debate, first voting symbolically with Democrats against some of the cruelest cuts, but ultimately enabling those same cuts with his vote for the final bill.
Dent had wanted to make smaller cuts and spread the pain evenly across all agencies--a mistake, since it would've failed to take into account strategic priorities, and still would've done nothing to limit the job losses described above.
As voters consistently say jobs are a more important priority than the deficit, it doesn't make any sense for Republicans to be prioritizing cuts that will cost jobs.
With 9 percent unemployment, very low inflation and bargain-basement borrowing costs, Dent's top priority should be getting the economy back to full employment by investing in our future productivity.
We know that the stimulus boosted GDP and job growth, and now we see that spending cuts--the opposite of a stimulus--shrink GDP and increase unemployment.
After our economy returns to the natural rate of unemployment, we will have to make some difficult budget choices, but we should make the cuts when the economy is healthy and growing again.
The worst time to cut is in the middle of the slump. It would be a mistake to choke off the recovery this early.