It’s interesting that a Moody’s Analytics study is being quoted to suggest the U.S. House Republican plan to cut $61 billion in borrowing and spending this year would destroy 700,000 jobs over two years.
And yet the same Moody's study, authored by Mark Zandi, one of the architects of President Obama’s 2009 “stimulus,” says the Democrats will have to cut $400 billion a year if the economy is ever to stabilize.
So, it seems, the Republicans aren’t doing nearly enough. They should be cutting $400 billion in spending and let the private sector reorganize in a reality-based economy.
Huge 1.6% cut. It defies credibility that cutting $61 billion in federal borrowing and spending would produce a net loss of 700,000 jobs. A $61 billion reduction is a 1.6 percent cut of a $3.83 trillion federal budget. I repeat, it's 1.6 percent of an enormously bloated, debt-fed budget.
Non-productive government jobs would be lost, true, but they shouldn't be there now. And within two or three years, if the budget continues closer to balance and economical U.S. energy supplies grow, productive private-sector jobs would more than make up for the losses.
In 2009, the Democrats borrowed and spent almost 10 times $61 billion, promising to prevent unemployment from exceeding 8 percent (and telling us we’d have 9 percent joblessness without the Moody-Zandi “stimulus”).
Into the chasm. Then the "stimulus" gave us 10 percent unemployment. Thanks, Mark Zandi. Why should we keep listening to you, when your plan took an economy from the edge of a cliff and into the chasm?
Zandi in December 2009:
The Great Recession has given way to a tentative and fragile economic recovery. I expect the recovery to evolve into a self-sustaining economic expansion, but that won't be until 2011. …
[T]he job losses will end early in 2010 and for meaningful job growth to resume by yearend 2010. Unemployment will rise through next summer, peaking as high as 11 percent. Full-employment, which is consistent with a 5.5 percent unemployment rate, isn't likely until 2013. Even this depends on continued, very aggressive policy support; the Fed needs to keep rates at near zero throughout 2010, and fiscal policymakers need to come forward with more temporary tax cuts and spending increases.
Continued bleeding. The Fed did keep interest rates near zero throughout 2010, and it didn't seem to matter. But keep increasing spending? It makes you wonder how much some people will bleed the patient before they realize they’ve killed her.