The White House and Congress reached an agreement to avert a budget shutdown late Friday night, passed a short-term extension of the budget Saturday morning, but did not release the actual details of the agreement until this morning. So much for a new era of transparency in Washington!
We learned today that the budget agreement includes steep cuts to the Environmental Protection Agency (targeting programs that combat global warming and protect clean drinking water), international food aid and high-speed rail. Half of the $40 billion in cuts come from the Education, Labor and Heath and Human Services departments, for things like community development grants, HIV/AIDS prevention and low-income heating subsidies. The Pentagon will receive $5 billion more than it did in 2010. This agreement disproportionately harms lower-income and middle-class Americans while asking no sacrifice from the rich and powerful.
How will such cuts impact our economic recovery? As Ezra Klein pointed out, economists projected that the $60 billion budget passed by House Republicans in February would eliminate anywhere from 200,000 to 700,000 jobs. Under that same logic, Klein writes, “$39b in cuts would mean about 120,000 to 450,000 jobs lost.” Though no one has yet done a thorough economic analysis of the latest cuts, the plan could slow economic growth by 1 percent, according to a sample of economists interviewed by the New York Times.
Tomorrow President Obama will give a major speech on the deficit and is expected to highlight the report produced by his deficit-commission, Simpson-Bowles, in November. According to the Economic Policy Institute, that plan could cost the country 4 million jobs over the next three years. “Premature implementation of austerity policies and slowing economic growth would mean two things: more job losses and less deficit reduction,” EPI writes. (For a progressive take on deficit reduction, see Representative Jan Schakowsky’s plan.)
The debate in Washington over the deficit is between a center-right plan (Simpson-Bowles) and a truly right-wing one (Paul Ryan). No wonder the center is moving to the right.