The demand from Congressional Republicans to slash over $60 billion from the federal budget has been analyzed by two independent sources and the outlook is grim. From the latest report from Moody’s Analytics chief economist Mark Zandi (emphasis mine):
While the government spending cuts proposed by House Republicans for this fiscal year mean only modest fiscal restraint, this restraint is meaningful. If fully adopted, the cuts would shave almost 0.5% from real GDP growth in 2011 and another 0.2% in 2012. There would be almost 400,000 fewer U.S. jobs by the end of 2011 than without the cuts and some 700,000 fewer jobs by the end of 2012.
A week earlier, Goldman Sach’s produced a private report for their investors estimating even greater damage. They found the GOP budget “would be a drag on the economy, cutting economic growth by about two percent of GDP.”