Sen. Schumer: GOP spending bill is 'recipe for a double-dip recession'

Senate Democratic Policy Committee Vice Chairman Chuck Schumer (D-N.Y.) says Republicans’ 2011 spending bill would lead to a double-dip recession, claiming it would "snuff out any chance of recovery."

"House Republicans’ proposal is a recipe for a double-dip recession," Schumer said Wednesday in a statement. "Just as the economy is beginning to pick up a little steam, the Republican budget would snuff out any chance of recovery."

Schumer was citing analysis released by Goldman Sachs' forecaster Alec Phillips on Wednesday that said the GOP spending plan for $61 billion in spending cuts could reduce Gross Domestic Product (GDP) growth by 1.5 to 2 percentage points later this year.

"This analysis puts a dagger through the heart of their ‘cut-and-grow’ fantasy," said Schumer. "We need to reduce the deficit, but we must do it by striking the right balance between cutting spending and growing the economy."

A spokesman for House Speaker John Boehner (R-Ohio) fired back at Schumer, saying the New York senator was stuck in an "outdated Washington mindset."

"We don't need more ineffective 'stimulus' spending — we need to get our economy growing again and help the private sector create jobs," Michael Steel said in a statement.

Boehner's (R-Ohio) press office blasted reporters with a release that accused Democrats of prioritizing lobbyists over the will of the people.

"All That Stands Between You & the Spending Cuts Our Economy Needs: Senate Dems & An 'Army of Lobbyists,'" read the title of the e-mail.

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The Goldman report comes as Republicans and Democrats are engaged in a back-and-forth over federal spending, with a temporary measure to fund the government set to expire March 4. With that in mind, top lawmakers on both sides of the aisle have been positioning their sides to come out on top in the messaging war, should a shutdown actually occur. 

The Goldman Sachs forecast expressed some skepticism that the House spending plan will become law, even as it measures the legislation’s impact. 

A more likely outcome, the report declares, is a smaller cut in discretionary spending. The analysis found that a $25 billion decrease in spending in the second half of this fiscal year would reduce economic growth by 1 percentage point, though it also predicted that drag would fade over time.

The study also gauges the potential impact of a government shutdown, finding that each week the government is shuttered would reduce federal spending by an estimated $8 billion and could decrease real GDP by as much as 0.8 percentage points in the fiscal quarter it happened. Officials on both sides of the aisle have said they believe a shutdown can be averted.