Or so says Goldman Sachs in a newly issued report. The Republican's measly $61 billion in cuts will cause a 1.5% to 2% decrease in economic growth according to Alec Phillips, a Goldman Sachs economist. Chuck Schumer (D-Wall Street) said of the report [emphasis mine]:
This nonpartisan study proves that the House Republicans’ proposal is a recipe for a double-dip recession. Just as the economy is beginning to pick up a little steam, the Republican budget would snuff out any chance of recovery. This analysis puts a dagger through the heart of their ‘cut-and-grow’ fantasy.
First of all, this study is by no means "nonpartisan." Goldman Sachs is the prime example of the revolving door between government and big business. A blog post at "The Spiderlegs Conundrum" provides a quick analysis of the complex web that binds the Obama Administration with Goldman Sachs. The interconnectedness of these two Too Big To Fails is mind-numbing and often makes me wonder who is really calling the shots. It is, therefore, absolutely preposterous to call this analysis "nonpartisan."
Secondly, $61 billion in cuts is pitiful and a mere drop in the bucket given the soon-to-be-horribly-realized fiscal crisis. Also, diverting $61 billion away from the mismanaged and unproductive public sector back to the private sector would make most better off, except those receiving that funding of course.
Phillips has offered a compromise that could be pursued rather than those devastating $61 billion cuts. How about a whopping $25 billion? Even better, it will only "lead to a smaller drag on growth of 1 percentage point in the second quarter."
One percent, one and a half percent. What's the difference?