Republicans' spending cuts could cost the country hundreds of thousands of jobs. They're OK with that.
Democrats have been arguing for weeks that the GOP's spending cuts will be bad for the economy, and in the last week they've celebrated two new analyses that bear none of their fingerprints but validate just about everything they've been saying. To which Republicans respond: And your point is … what, exactly? In the debate over the impact of federal spending on the economy, Democrats think they have turned over a royal flush. But it turns out the game Republicans are playing is blackjack.
Last week, ABC News obtained an analysis of the GOP's spending cuts, put together by Goldman Sachs economist Alec Phillips, that predicted a one-time 0.8 point hit to GDP if the cuts passed. On Monday, the Washington Post produced an analysis of the cuts from Mark Zandi of Moody's Economy.com that reached an equally gloomy conclusion: Slash spending at the level House Speaker John Boehner wants and watch the economy shed 700,000 jobs by the end of 2012.
On Tuesday morning, Boehner had a simple way to dismiss Zandi: He was Nancy Pelosi's "pet economist," not worth taking seriously. The day before, Majority Leader Eric Cantor came to his weekly briefing on Monday aware that he'd be asked about this—asked, at least, about Zandi—and he waved it off. "I would note that Mr. Zandi was a chief proponent of the Obama/Reid/Pelosi stimulus bill that we know has failed to deliver on the promise of making sure unemployment did not rise above 8 percent," said Cantor. "I also think it is important to ask the question … 'What kind of jobs is he talking about?' Is he talking about government jobs, and, if so, why is the government hiring people it can't afford to pay? This is obviously an unsustainable situation and something that we are trying to address through our approach in the CR we passed two weeks ago."
Cantor got the obvious follow-up questions: Didn't Republicans realize spending cuts would kill some jobs? After all, they want to terminate some government jobs and send some public-sector employees to the ranks of the unemployed.
Cantor parried by saying "the real question" was whether "you want the government to continue to fund jobs that we can't afford."
Zandi, Phillips, and other economists who think the government has been creating or saving jobs with supply-side spending are not taken seriously on the right. They have economic models that rate how much "bang for the buck" (they prefer this cliché) is delivered from various types of spending—unemployment checks, food stamps, tax cuts. They have the CBO's numbers, which posit that 1.4 million to 3.5 million people have jobs that wouldn't have existed without the stimulus package that became law two years ago this month. Republicans just don't buy them.
"These analyses by the Keynesians are missing a key part of the story," Rep. John Campbell, R-Calif., explained Monday. "One hundred percent of the money they're talking about is borrowed. Republicans, right now, are talking about cutting spending on the margins, and 100 percent of what we don't cut will be borrowed. The capital that they're putting to work is capital that's not improving something in the private sector, and all of these studies fail to take into account the interest we're paying on the deficit."
Campbell, an Ayn Rand disciple, has been saying this for a while. Republicans have started aping him only recently. Two years ago, as they opposed the stimulus bill, House Republicans reverse-engineered the White House's economic models—models bearing a kissing-cousin resemblance to Zandi's—and promised 6.2 million jobs for half the price of the Democrats' proposal. The number was based on calculating how many jobs would be killed by tax hikes and inverting it.
David Weigel is a Slate political reporter. You can reach him at email@example.com, or tweet at him @daveweigel.
Photograph of Eric Cantor and John Boehner by Mark Wilson/Getty Images.