The New Debt Deal May Cost Up To 1.8 Million Jobs!

Submitted by Lawrence Rafferty-Guest Blogger

Weren’t we told that if the Debt Ceiling was not raised that the Triple A credit rating of the United States would suffer?  I guess the credit agencies don’t care if 1.8 Million jobs are lost in the process!  “The Economic Policy Institute, a top nonpartisan think tank, estimates that the deal struck this weekend to raise the nation’s debt limit will end up costing the economy 1.8 million jobs by 2012. Today the Senate is expected to approve the package passed yesterday by the House and send it to President Obama. But while the unemployment rate remains above 9 percent, the deal does nothing to address chronic joblessness.

The agreement would reduce spending by at least $1 trillion over 10 years, but even the near-term cuts could shrink already sluggish GDP growth by 0.3% in 2012. According to EPI, the plan “not only erodes funding for public investments and safety-net spending, but also misses an important opportunity to address the lack of jobs.” In particular, the immediate spending cuts and the “failure to continue two key supports to the economy (the payroll tax holiday and emergency unemployment benefits for the long term unemployed) could lead to roughly 1.8 million fewer jobs in 2012.” Think Progress

Let me get this straight.  We allegedly saved our credit rating by agreeing to slash government spending without any increase in revenues, but we put almost 2 million jobs at risk at the same time.  That sounds like a perfect storm for Main Street.  Even the President of the bond investment firm Pimco thinks that the debt deal will weaken the economy.  “But left out of the equation thus far is what impact those sorts of cuts will have on an economy struggling to recover from the Great Recession. Mohamed El-Erian, CEO of the bond investment firm Pimco, said yesterday that the deal will weaken the already fragile economy:  The potential budget agreement “does nothing to restore household and corporate confidence. So unemployment will be higher than it would have been otherwise, growth will be lower than it would be otherwise, and inequality will be worse than it would be otherwise.” […] “We have a very weak economy, so withdrawing more spending at this stage will make it even weaker,” El-Erian said.”  Pimco

There are experts making the argument now that the special Congressional Committee established by this debt ceiling agreement must be used to include revenue enhancements and job creation measures in order to help the struggling economy. “The deal pending before Congress today just starts the process. The next steps, including who is appointed to the committee, are crucial in determining the consequences unleashed. While the committee is charged with finding a net decrease in the deficit of $1.5 trillion, there are better pathways to that result. The committee could find more revenue and spending cuts and include proposals that help foster job creation.

Indeed, job creation and boosting the economy should be an important litmus test for the work of the committee and progressives should hold the committee, its members, and the resulting product to that standard. If the committee’s proposal doesn’t accomplish this in its recommendations, then it’s hard to imagine how those recommendations will be any better than a stalemate that produces the automatic cuts to both domestic and defense spending—and potentially the expiration of all the Bush tax cuts.”  American Progress

When will Congress actually do something to help create jobs?  The Stimulus helped, but it was not enough. People need jobs increased, not increased cuts.  Can jobs be saved or is it too late?  Does Congress really care about everyday Americans or do the wealthy and corporate interests rule the day?  I am open for suggestions!

Submitted by Lawrence Rafferty-Guest Blogger


80 thoughts on “The New Debt Deal May Cost Up To 1.8 Million Jobs!”

  1. now that i think about it, having a backward arm would come in handy when bandaging your ankle. you knee wouldn’t get in the way so much.

  2. eniobob-

    I thank you for the link to the info on ALEC. I went from there to another website :

    It in turn had many links, including one on my home state called “ALEC & Wisconsin” at a website called This is a long article titled “ALEC Bills in Wisconsin”, but well worth reading to understand what a huge influence ALEC (American Legislative Exchange Council) has had in Wisconsin and what an amazing volume of toxic legislation has been passed in only 7 months. I knew that a lot of bad bills had passed in Madison under Republican control, but I had no idea of how bad it really is. This should serve as a warning to people whose states are now under Republican control or might be after the 2012 elections.

  3. HenMan,

    Were you following the fight over on the other thread? Quite a rumble.

  4. Blouise-

    One of the fringe benefits of owning bobcats is the knowledge you gain of human anatomy and amateur emergency surgery. Fortunately, Treacherous Bob remembers how long he had to eat broccoli after he severed my jugular vein, so he hasn’t tried that again. He does love his Purina Bobcat Chow with homemade gravy. He also enjoys going birding with me, but he doesn’t carry the “Field Guide to North American Birds” with him, just a bottle of Heinz Ketchup.

  5. HenMan,

    I hope it wasn’t the ankle on the same side as your backward arm … balance is very important when hopping.

  6. Isn’t it amazing that the market crashes after the debt deal is done? Was it really due to the concerns of the global economy’s woes or over the possible loss of 1.8 million jobs? Or both? Or is there something else in play? Too many questions!

  7. Blouise-

    Treacherous Bob just took off my left ankle. I’ll be in the Johnson&Johnson room for the rest of the evening.

  8. lottakatz and HenMan (I love putting those two names together),

    The republicans are going to have to do some serious rebranding of their Tea Party label … and fast … 2012 is just around the corner.

    The democrats are going to have to do some serious work too for nobody came out of this mess clean.

  9. Blouise
    Back lash time … big time

    I think you’re right about that. Six more days ’til the Wisconsin recalls, the 6 Republicans being recalled vote on the 9th and the 2 Dems on the 19th. These elections should be like reading tea leaves for the 2012 election. There’s a lot of anger in the country aimed rightly at the House and Senate.

  10. From the NY Times:

    “Breaking News Alert
    The New York Times
    Thursday, August 4, 2011 — 6:31 PM EDT

    Disapproval Rating of Congress at a Record 82 Percent, Poll Finds

    The debate over raising the debt ceiling, which brought the nation to the brink of default, has sent disapproval of Congress to its highest level on record and left most Americans saying that creating jobs should now take priority over cutting spending, according to the latest New York Times/CBS News poll.

    A record 82 percent of Americans now disapprove of the way Congress is handling its job — the most since The Times first began asking the question in 1977, and even more than after another political stalemate led to a shutdown of the federal government in 1995.

    More than four out of five people surveyed said that the recent debt ceiling debate was more about gaining political advantage than about doing what is best for the country. Nearly three-quarters said that the debate had harmed the image of the United States in the rest of the world. “

  11. “Superbestfriends committee” sounds like a fundraising gig rather than a cost cutting deal … probably has levels … silver, gold, and the ever famous, platinum. Maybe Wally O’Dell will crawl out from under his rock and beg to be admitted.

  12. Austerity policies produce, hear me out on this, austerity. And if the nation’s governors think federal austerity is going to be good for the states, we should ask them again in 2012.

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