There is no debate: Federal budget cuts will hurt the economy

This week progressives opposed to the GOP austerity agenda cut proposal gained some great talking points, first from a leaked Goldman Sachs study that projected the plan would decrease the GDP by 2 percent and raise unemployment by 1 percent, and then from a Moody’s Analytics report from Mark Zandi that projected it would destroy 700,000 jobs.

Yesterday, Republicans hit back with testimony from Federal Reserve Chair Ben Bernanke that job losses would be “much less than 700,000” and the GDP would only fall by 0.7%. But as Kevin Drum points out, “That's the big news from Bernanke's testimony: not that he thinks other estimates of job losses are too high, but the fact that he agrees the Republican budget plan will cost jobs and slow growth. That's coming from a Republican Fed chair!”

The majority of economists seem to agree. Yesterday former Fed Vice Chairman Alan Blinder, Nobel Prize winners Kenneth Arrow and Eric Maskin, and a host of other economists and budget experts sent Congress a letter imploring it to refrain from cuts. We also know that the UK’s austerity plan destroyed their recovery, causing a 2 percent GDP backslide.

Sarah Babbage is an intern with Demos. This piece is part of a series of articles and posts from Demos on Our Fiscal Security.