CBO: Sequester cuts would cost up to 1.6M jobs through 2014
The nonpartisan Congressional Budget Office on Thursday estimated that keeping the spending cuts from sequestration in place through fiscal 2014 would cost up to 1.6 million jobs.
Canceling the cuts, on the other hand, would yield between 300,000 to 1.6 million new jobs, with the most likely outcome being the addition of 900,000, the CBO said.
“Those changes would increase the level of real (inflation-adjusted) gross domestic product (GDP) by 0.7 percent and increase the level of employment by 0.9 million in the third quarter of calendar year 2014 (the end of fiscal year 2014) relative to the levels projected under current law,” the report states.
The new CBO report was requested by House Democratic fiscal point-man Chris Van Hollen (Md.), who on Thursday said the party plans to make the report the centerpiece of a major push in August to reverse the $109 billion annual cuts that started March 1.
Van Hollen’s district is populated with federal workers who have faced furloughs since the sequester went into effect.
“These are big numbers, and this is a very timely report, especially in light of the president’s speech this week on the middle class and the economy,” Van Hollen told The Hill.
“This boils down the sequester in very plain terms that everybody can understand. You would hope that everyone should agree we should not be harming the economy.”
CBO also notes in the report that turning off the cuts would add to the federal debt.
boosting debt above the amounts projected under current law would
diminish policymakers’ ability to use tax and spending policies to
respond to unexpected future challenges and would increase the risk of a
fiscal crisis,” CBO said.
Democrats have been frustrated by their inability to build pressure on House Republicans to reverse the sequester.
House appropriators are producing 12 annual bills with an overall spending level of $967 billion. That’s $91 billion less than the bill being worked on in the Senate, where Democrats are crafting bills under the assumption sequestration is stopped. The gulf between the chambers on spending could lead to a government shutdown Oct. 1.
Democrats have warned of that impact of sequestration before but have struggled to mobilize public pressure to reverse the cuts.
Doomsday scenarios painted by the White House did not pan out in March, and the slow accumulation of cuts made to everything from Head Start to defense manufacturing has been difficult to highlight.
“This kind of information should be something that shakes people up a little bit and forces them to recognize the human toll,” Van Hollen said of the CBO report.
He noted he has tried seven times since the sequester began to get a vote on a replacement bill with farm subsidy cuts and tax increases.
The budget office’s report says spending would increase $14 billion in 2013 and by $90 billion in fiscal 2014 if the sequester cuts were cancelled.
Behind the scenes on Thursday, Republicans quickly panned the CBO study as flawed.
“We have been unable to generate such rosy results using any of the conventional modeling tools that economists routinely use,” Senate GOP Budget spokesman Andrew Logan said.
Van Hollen said he wasn’t surprised by the criticism.
“They always seem to cherry pick the numbers they like,” he said.
— This story was last updated at 3:21 p.m.
Copyright 2023 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.