West Wing Briefing
In budget battle, two sides bring out their economists
Tuesday, March 1, 2011; 10:00 AM
Bring on the economists. Even as Republicans and Democrats seem likely to reach a temporary budget deal to keep the government from shutting down this week, both sides are preparing for a long debate over how much to cut government spending in this and next year's budgets. And like the debates over the stimulus and the health-care law, the two parties are trying to win the public relations battle by invoking the research of their favorite economists.
Democrats have spent the past week trumpeting a report by Goldman Sachs that says adopting the House Republican budget plan, which would cut $61 billion in spending over the next seven months, would slow economic growth. Then Monday, they widely circulated research by Mark Zandi, chief economist of Moody's Analytics, that says the Republican plan to fund the government would derail the economic recovery and cost 700,000 jobs in the next two years.
Republicans responded later in the day by sending out a blog post by Taylor, a professor of economics at Stanford whose views they frequently invoke.
"There is no convincing evidence that H.R. 1 will reduce economic growth or total employment," Taylor wrote, referring to the GOP budget bill. "To the contrary, there is more reason to expect that it will increase economic growth and employment as the federal government begins to put its fiscal house in order and encourage job-producing private sector investment."
Taylor not only defended the GOP bill, but also repeatedly attacked the approach of Zandi and Goldman Sachs in coming up with their estimates for economic growth.
The two men's views are not entirely surprising. Although he advised Sen. John McCain (R-Ariz.) in 2008, Zandi is a registered Democrat who advised the party on the 2009 stimulus bill. He argued then that a major increase in government spending was needed to boost the economy following the recession and is now calling for a more gradual decrease in federal spending, two positions at odds with the House GOP.
Taylor, meanwhile, worked in the Ford, George H.W. Bush and George W. Bush administrations as an economic adviser and has been cited by Republicans in the past two years criticizing the growth in federal spending and the new health-care law.
Zandi's view that the stimulus helped the overall economy is broadly supported by economists, many of whom also believe the GOP proposal would cut spending too drastically. The liberal Center for American Progress will release a letter Tuesday signed by 320 economists that says "cutting investments from the federal budget will undermine the strength of America's economy," which they argue would happen under the Republican plan.
But Republicans have a counter-argument: The stimulus did not reduce unemployment as much as Zandi or the Democrats who championed it said it would, raising doubts about Zandi's analysis of the GOP budget proposal.
Zandi argues that unemployment would have been much higher without the stimulus, a view backed by the Congressional Budget Office and other nonpartisan sources.
"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 House Majority Leader Eric Cantor (R-Va.).
Interestingly, Cantor brought up Zandi's analysis unprompted at a press conference, showing that both parties are aware of the potential power of anyone with an economics degree in political Washington.