10. “The Republican budget would…destroy 700,000 jobs, according to an independent economic analysis.”
Yes, you read that figure right. MoveOn.org claims that the new budget cuts proposed by the House Republican leadership would put nearly three-quarters of a million Americans out of work. MoveOn.org cites a Washington Post article that makes such a claim, though when I Googled the phrases “Republican budget” and “destroy jobs,” I saw figures as high as 800,000 and one million jobs destroyed. Those evil Republicans!
Here’s the lowdown: the “independent economic analysis” was performed by economist Mark Zandi, a registered Democrat who was instrumental in developing the 2009 stimulus package. Goldman Sachs issued a similar report stating that the Republican budget would slow down the economy.
To the credit of the Post, the reporter allowed Republicans to respond:
“The fact that a relentless cheerleader for the failed ‘stimulus’ – which the Democrats who run Washington claimed would keep unemployment below eight percent – refuses to understand that ending the spending binge will help the private sector create jobs is sad, but not surprising,” said Michael Steel, a spokesman for House Speaker John A. Boehner (R-Ohio).
Republican leaders frequently claim that cutting government spending will create jobs by removing the fear of higher taxes from the minds of the nation’s business owners and entrepreneurs.
“There is more money sitting on the sidelines than there has been in the last 50 years,” Rep. Kevin McCarthy (R-Calif.), the number three Republican in the House, told reporters last week. Freeing business to invest that cash would produce “stronger stimulus” than anything government could do, McCarthy said. “That is a philosophy we know that would work.”
Stanford University economist John B. Taylor poked holes in the reports:
[Taylor] argued that the macroeconomic models employed by Zandi, Goldman Sachs and many other independent forecasters — including the Congressional Budget Office — overstate the economic impact of government spending and ignore the boost to confidence that would come from reining it in.
Taylor also noted that CBO’s analysis of the GOP budget bill shows that it would only cut spending by $19 billion over the next seven months, with the remainder of the $61 billion in cuts taking effect in future fiscal years.
“Thus the cut in budget authority does not reduce spending “abruptly,” as the [Goldman Sachs] report assumes,” Taylor writes in his blog, Economics One. “Rather it is a quite gradual effect. Even if one used the flawed Keynesian multipliers implied by the report, the impact would be less than one-third what the report claims.”
So, it appears that the Democrats and their accomplices in the Left-leaning media (along with MoveOn.org) found a couple of reports that fit their Chicken Little claims about the proposed budget, and they ran with those flawed numbers. Clearly they’ll do whatever it takes to scare people into believing that spending cuts are bad.