The report by Moody's Analytics chief economist Mark Zandi, gives Democrats another arrow in their quiver when attacking the GOP plan that would end dozens of federal programs and trim appropriations by $61 billion during the remainder of current fiscal year, which ends Sept. 30, The Washington Post reported Monday.
Zandi, a developer of the 2009 stimulus package and an adviser to members of both political parties, said the GOP package would reduce economic growth by 0.5 percentage points this year, and by 0.2 percentage points in 2012, resulting in 700,000 fewer jobs by the end of 2012.
Last week, investment bank Goldman Sachs predicted Republican spending cuts would endanger the economy, slowing growth by up to 2 percentage points in the second and third quarters of this year.
But Zandi's analysis also had bad news for liberal Democrats resistant to steep spending cuts, the Post said. The economist said reducing deficits to sustainable levels will require more than a growing economy, estimating Congress still would have to cut about $400 billion a year through the rest of this decade to shrink the spending-revenue gap and stop adding to the national debt.
"Significant government spending restraint is vital, but given the still halting economic recovery, it would be counterproductive for that restraint to begin until the economy is creating enough jobs to bring down the still very high unemployment rate," Zandi said in his analysis. "Shutting the government down for any length of time would also be taking a big chance with the recovery, not only because of the disruption to government services, but also due to the potential hit to the fragile collective psyche."
Congress needs to pass a continuing resolution by Friday to avoid a federal government shutdown.