A $61.5 billion spending-cut bill passed by the U.S. House of Representatives on Saturday would slow economic growth significantly this year, according to an analysis by the global investment firm Goldman Sachs.
“Under the House passed spending bill, the drag on GDP growth from federal fiscal policy would increase by 1.5pp (percentage points) to 2pp in Q2 and Q3 compared with current law,” according to Alec Phillips, who signed the analysis that is dated Tuesday.
Democrats, who want to maintain spending this year at around current levels, seized on the Goldman Sachs analysis.
“This nonpartisan study proves that the House Republicans’ proposal is a recipe for a double-dip recession,” said Senator Charles Schumer, a member of the Senate’s Democratic leadership.
Republicans in Congress, especially conservative Tea Party activists who were elected in November, have touted their fiscal 2011 spending-cut bill and upcoming attempts to impose more U.S. budget cuts as the key to improving the economy and creating jobs.
Goldman Sachs is one of President Obama’s strongest backers, second perhaps only to JPMorgan Chase. If Republicans find “government-subsidized malefactors of great wealth” too strong, they might try bashing “Wall Street Welfare Queens.” Oh, and buy a copy of Charlie Gasparino’s Bought and Paid For to see how the sausage was made.