{"id":283349,"date":"2011-02-27T16:53:50","date_gmt":"2011-02-27T16:53:50","guid":{"rendered":"http:\/\/www.ghanamma.net\/2011\/02\/27\/how-spending-cuts-hurt-the-economy\/"},"modified":"2011-02-27T16:53:50","modified_gmt":"2011-02-27T16:53:50","slug":"how-spending-cuts-hurt-the-economy","status":"publish","type":"post","link":"https:\/\/www.ghanamma.com\/2011\/02\/27\/how-spending-cuts-hurt-the-economy\/","title":{"rendered":"How spending cuts hurt the economy"},"content":{"rendered":"<p><div readability=\"77.0516556291\"><span id=\"fb-recommend\"\/><br \/>\n<span>By Lex Haris, managing editor<\/span><span>February 27, 2011: 11:49 AM ET<\/span><!--startclickprintexclude--><br clear=\"all\"\/><!--endclickprintexclude--><!-- CONTENT --><\/p>\n<p>NEW YORK (CNNMoney) &#8212; The big spending cuts proposed by House Republicans could weigh on economic growth and jobs, but forecasts vary widely.<\/p>\n<p>Economist Mark Zandi of Moody&#8217;s Analytics said Sunday that if all <a href=\"http:\/\/money.cnn.com\/2011\/02\/18\/news\/economy\/budget_cuts_2011\/index.htm\">$61 billion in proposed cuts<\/a> for the rest of this year were enacted, the economy&#8217;s growth could be reduced by half a percentage point. Many forecasters expect the economy to grow at around 3.5% this year.<\/p>\n<p><!-- REAP --><!--startclickprintexclude--><!--endclickprintexclude--><!-- \/REAP --><\/p>\n<p>By the end of the year, Zandi said, those spending cuts could cost the economy between 400,000 and 500,000 jobs.<\/p>\n<p>&#8220;I think it&#8217;s premature to engage in that kind of budget cutting,&#8221; Zandi said. &#8220;We can&#8217;t do that, I don&#8217;t think, until the economy is off and running.&#8221;<\/p>\n<p>Zandi was speaking on <a href=\"http:\/\/www.cnn.com\/CNN\/Programs\/state.of.the.union\/?hpt=tvdrop\">CNN&#8217;s State of the Union with Candy Crowley<\/a>.<\/p>\n<p>But economist Douglas Holtz-Eakin said that cuts would have a much smaller impact on growth: 2 to 3-tenths of a percentage point. &#8220;It&#8217;s a rounding error,&#8221; said Holtz-Eakin, who was a top economist in the George W. Bush White House and also served as director of the Congressional Budget Office. <\/p>\n<p>Instead, said Holtz-Eakin, who was also on State of the Union, the budget cuts could ultimately have a positive impact by reducing the fear of increases in interest rates and taxes that deficits can cause.<\/p>\n<p>The proposed spending cuts are &#8220;tiny,&#8221; relative to the $15 trillion U.S. economy, said Holtz-Eakin. &#8220;The notion that somehow doing the right thing in this amount is going to harm us is just misplaced.&#8221;<\/p>\n<p><!-- REAP --><!--startclickprintexclude--><!--endclickprintexclude--><!-- \/REAP --><\/p>\n<p>Zandi agreed that we need to address the deficits &#8211; just not yet. &#8220;We are not creating enough jobs to bring down unemployment. We need to have all the juice we can get to make sure that&#8217;s happening before we go through these budget cuts.&#8221;<\/p>\n<p>Last week, <a href=\"http:\/\/money.cnn.com\/2011\/02\/23\/news\/economy\/spending_cuts_economic_growth\/index.htm\">Goldman Sachs economists<\/a> said the impact of budget cuts could be far worse: 1.5 percentage points to 2 percentage points in the second and third quarters.<\/p>\n<p>On Friday, economic growth in the fourth quarter of 2010 was <a href=\"http:\/\/money.cnn.com\/2011\/02\/25\/news\/economy\/gdp_revision\/index.htm\">revised sharply lower<\/a>, to 2.8%, driven largely by budget cuts by state and local governments.\u00a0<a href=\"http:\/\/money.cnn.com\/2011\/02\/27\/news\/economy\/budget_cuts_forecasts\/index.htm?section=money_topstories&#038;utm_source=feedburner&#038;utm_medium=feed&#038;utm_campaign=Feed%3A+rss%2Fmoney_topstories+%28Top+Stories%29#TOP\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/www.ghanamma.net\/wp-content\/uploads\/2011\/02\/0e63013ebug.gif\" alt=\"To top of page\" border=\"0\" width=\"7\" height=\"7\" \/><\/a><\/p>\n<p><!-- \/CONTENT --><!--startclickprintexclude--><!--startclickprintexclude--><br \/>\n<!--endclickprintexclude--><!--endclickprintexclude--><\/div>\n<\/p>\n<p><img decoding=\"async\" src=\"http:\/\/www.ghanamma.net\/wp-content\/uploads\/2011\/02\/0e63013ebug.gif\" \/><\/p>\n<p>Follow this link:<br \/>\n<a target=\"_blank\" href=\"http:\/\/rss.cnn.com\/~r\/rss\/money_topstories\/~3\/MQSrCkT7K30\/index.htm\" title=\"How spending cuts hurt the economy\" rel=\"noopener noreferrer\">How spending cuts hurt the economy<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p> By Lex Haris, managing editor February 27, 2011: 11:49 AM ET NEW YORK (CNNMoney) &#8212; The big spending cuts proposed by House Republicans could weigh on economic growth and jobs, but forecasts vary widely. <\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-283349","post","type-post","status-publish","format-standard"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.0 - 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