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2chambers
Posted at 03:41 PM ET, 04/12/2011

Will the 2011 budget deal cost jobs?

Congressional Democrats expended much of their political energies over the past two months hammering Republicans on their proposed $61 billion in budget cuts, citing a slew of reports including one projection by Moody’s Analytics chief economist Mark Zandi that the proposal would have resulted in 700,000 fewer jobs by the end of 2012.

Republicans, meanwhile, disputed the accuracy of those reports and held a jobs forum last month at which they and business owners drove home the message that the party’s ultimate goal in cutting spending is to spur job growth.

Now that further details have emerged on the final 2011 budget agreement hammered out by President Obama and congressional leaders late last week, where do things stand on each party’s job-creation argument?

Both sides have been noticeably silent on the issue.

The only jobs specifically mentioned in the legislation are four Obama administration “czar” jobs – the “health-care czar,” “climate change czar,” “car czar” and “urban affairs czar” – that are already vacant.

On top of that, Obama himself, in his remarks shortly after the budget deal was announced last Friday, mentioned the word “jobs” only twice – and in neither reference did he explicitly say that the budget deal would create them.

One question that Democrats have yet to fully answer: If the $61 billion in cuts would have resulted in the loss of 700,000 jobs, would $38 billion in cuts still result in hundreds of thousands of jobs being lost?

Asked that question Tuesday morning, House Minority Whip Steny Hoyer (D-Md.) said that no specific estimates have been given, but his own outlook wasn’t rosy.

“I don’t think it’s going to be positive, but on the other hand, I think it’s going to be less than what was calculated under the $61 billion in cuts,” Hoyer said at his weekly pen-and-pad briefing.

Hoyer added that one factor that may make a difference is the composition of the cuts – the $38 billion in cuts, unlike the $61 billion initially proposed by House Republicans, will contain a mix of trims in both mandatory and discretionary spending.

“(Mandatory spending is) a significant part of this, approximately half, and so that may make a different calculation in terms of the job consequences,” Hoyer said.

Republicans, too, have yet to answer questions related to the budget compromise’s effect on job growth. For instance, what do the 150 economists that House Republican leaders cited in their defense back in February think about the current deal?

House Majority Leader Eric Cantor (R-Va.) on Tuesday declined to project whether the plan would affect job growth, emphasizing the importance of the country’s debt problem.

“Overall, what we’re saying is we’ve got to create an environment now where we’re projecting a plan to manage down the debt,” Cantor said when asked whether he thought the plan would create jobs. “That’s the biggest problem we’re facing. It impacts global investors’ confidence in this country; it impacts the value of our currency, and long-term, it impacts the future of our kids. That’s why we’re saying we need to address that. This is putting those words and promises into action, this long-term (funding deal).”

On Hoyer’s assertion that the deal may end up costing jobs, Cantor said he doubted whether the government ought to be hiring employees that it can’t afford.

“If Steny wants to say we’re going to threaten jobs, you’ve got to ask the question, how is it smart for this government to go about spending money and hiring people it can’t afford to?” he asked. “That’s where his perspective comes from, and you ought to ask the question, how is it good policy for us to be doing that?”

Polls show that jobs and the economy remain the top priorities on votes’ minds. In a March Gallup poll, 28 percent of respondents cited the economy in general as the most important problem facing the country; 26 percent cited unemployment/jobs; and 13 percent cited the federal budget deficit/federal debt.

By  |  03:41 PM ET, 04/12/2011

 
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