An economist has warned of the consequences of the Republican-led plan to make cuts to federal spending in exchange for raising the debt ceiling this week at a Senate hearing. The economist warned that the GOP’s plan would not only cut jobs but it would also slow the country’s economic growth.
The Moody Analytics chief economist Mark Zandi testified before the US Senate Budget Committee on Thursday. Zandi warned that the Republican-led plan to make cuts on federal spending would lead to the US GDP growth slowing down to 1.61 percent in 2024 compared to 2.23 percent if the plan was not implemented. The plan would also lead to a loss of 790,000 jobs.
Zandi said that the legislation, which passed through the Republican-controlled House last week if no amendments were made to it, would impact US economic growth. Zandi also said that the failure to avoid going into default would have “catastrophic” consequences. This is in line with the analysis of other economists.
Zandi said that the government will likely run out of funds to pay its bills on June 8 if the debt ceiling is still not raised by Congress. However, Zandi noted that this may happen at any time between June 1 to August 8.
“We need to end this drama as quickly as possible. If we don’t, we’ll go into a recession, and our fiscal problems will be made even worse,” said Zandi at the hearing.
Fellow Democrats of US President Joe Biden say that the federal spending cuts would undercut child care, education, and other federal programs. Republicans have argued that the cuts are necessary to slow the growth of the country’s debt, which will go up in the coming years due to the aging population, healthcare costs, and pensions
Meanwhile, as the US COVID border restrictions will be lifted in the coming days, Washington is gearing up for an anticipated surge in border crossings. Reuters reported that a new bipartisan push to overhaul immigration policies is growing in Congress, the latest of which involved giving US authorities expulsion powers similar to that of the Title 42 policy for two years, according to a congressional office familiar with the matter.