Ezra Klein: What's changed in Boehner 2.0

http://www.washingtonpost.com/blogs/ezra-klein/post/whats-changed-in-boehner-20/2011/07/11/gIQAQ43ZdI_blog.html

Boehner 2.0 got scored by the Congressional Budget Office today, and the results (pdf) aren’t as different from Boehner 1.0 as you might think. The spending cuts jumped from $850 billion to $915 billion. Bigger, but not that much bigger. The real change is in the timing: the original bill had only $5 billion in spending cuts next year. Like Reid’s bill, this version has more than $20 billion.

Remember that these spending cuts aren’t alone. Unless future legislation changes this, they’re alongside the expiration of the $160 billion payroll tax cut and the $60 billion in expanded unemployment insurance that the administration negotiated in the 2010 tax deal. So that means the economy — which is very weak right now — is losing something in the neighborhood of $250 billion in federal support.

Earlier today, Suzy Khimm quoted the International Monetary Fund saying “a fiscal consolidation equal to 1 percent of GDP typically reduces GDP by about 0.5 percent within two years and raises the unemployment rate by about 0.3 percentage point.” There’s reason to believe that in a weak global economy, the effect will actually be worse than that. But let’s say it isn’t. Projected GDP in 2012 is about $15.8 trillion. So a $250 billion cut is about 1.5 percent of 2012’s projected GDP. So whether we pass Reid or Boehner’s plan, we’re looking at a drag on growth of more than 0.5 percent of GDP and a drag on employment of more than 0.3 percent.

This is not good for the recovery.


(Ezra Talking debt ceiling with
Melissa Harris-Perry on maddow's show tonight)

is more federal spending not less.

says all we should need to know. Terrible idea.

It was reported earlier today, the Economy is slowing down
before any action. This slow down has nothing to do with
Debt Limit. The Emerson Company reported their business
is simply sluggish and they do not see any improvement.
Cisco Systems announced 1150 layoffs.

So our Leaders go CUT CUT CUT which will put more drag on
the economy.

Obama and the Democrats boxed themselves into a fiscal corner by not dealing with the revenue side of things when they could. It will go down as the biggest blunder of his first (and, hopefully, not only) term.

What's left is two wounded parties. The best thing Obama has going for him is the Republicans have overplayed their hand. Whether that's enough for him to overcome a weak economic record is TBD.