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Tuesday, January 15, 2019

As time continues to run out before Congress must raise the debt ceiling — Treasury Secretary Jack Lew has pegged February 27 as the date on which the “extraordinary measures” funding the government will be exhausted — a new report has confirmed the damage that previous standoffs have done to the U.S. economy.

According to the report from the Peterson Institute for International Economics — titled “Flirting With Default: Issues Raised By Debt Confrontations In The United States” — the debt ceiling standoffs of 2011 and 2013, the threat of falling over the fiscal cliff in 2012, the imposition of sequester cuts in March 2013, and the government shutdown in October 2013, had a tangible negative economic effect. Author David J. Stockton, a senior fellow at the Peterson Institute, writes that fiscal policy uncertainty caused by the governing crises “depressed the level of real GDP by about one percentage point and correspondingly raised the level of the unemployment rate by a bit more than 1/2 percentage point.”

That translates to a loss of $150 billion per year, and 750,000 jobs.

This is not the first attempt to quantify the damage of the various crises that have paralyzed Washington throughout the Obama administration; in October, Standard & Poor’s estimated that the government shutdown cost the economy $24 billion.

“There is no need for America’s legislators to behave as badly as their counterparts in far poorer and less solidly democratic countries do,” Peterson Institute president Adam S. Posen writes in the report, “and there certainly are significant costs of even threatening to do so.”

Whether Republicans will heed Posen’s advice is unclear. The GOP majority in the House of Representatives has been steadfast in its opposition to raising the debt ceiling without receiving some concession from Democrats, but Republicans can’t seem to agree on which hostage they should take. Over the past several weeks, proposals to tie a debt ceiling raise to changes to the Affordable Care Act, approval for the Keystone XL pipeline, or the reversal of cuts to military benefits have failed to gather enough support to pass without the nearly unthinkable prospect of Democratic help.

House Speaker John Boehner has hinted that he will eventually relent and partner with Democrats on a “clean” debt ceiling bill. But as the Peterson Institute study makes clear, even this strategy could have a detrimental impact on the economy if Boehner and his caucus once again wait until the last minute.

AFP Photo/Nicholas Kamm

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7 responses to “Study: Government-By-Crisis Has Cost 750,000 Jobs”

  1. charles king says:

    People, Where? has our Democracy gone. Why? can’t our government create jobs. Who? is to blame. What? the hell is going on. Lets be truthful with ourselves, Is it Racism that has thrown our Democracy under the bus. Why? we the people let this farce continue.The Vote is still more powerful than MONIES, do your duty and vote these pieces of S**** OUT, Democracts or Republicans get rid of the T**** they aren’t doing nothing but wasting time. One thing about our Democracy if you keep an eye out for the Do Nothing People they will show their hole card and you will not have to feel bad about VOTING them OUT.Thank You are the magic words in my book. I Love Ya All. To make your Democracy work You the People has to be alert to What? is going on with your Country’s business, and (You DO NOT DO NOTHING) that is My MOTTO. Mr. C. E. KING

  2. daniel bostdorf says:

    The American poeple will have an opportunity this Novemember to tell the GOP/Teaparty to get out of town.

    They must be held accountable for holding the American people hostage for strictly unethical and immoral reasons.

  3. Kurt CPI says:

    For every economist that preaches doom for not spending in deficit there’s another (or probably another 10) that extol the virtues of reigning in spending. As such, I question the (undisclosed) math behind these projections. BUT… The Obama administration has done a good job in doing just that – reducing deficit spending. Republicans blame social programs all the while spending ferociously on defense contracts that reward the military-industrial complex. With a Democratic majority that is likely to be extended in the near term, and – I believe – the near certainty of a Democratic administration with an even more favorable Congress following President Obama’s second term, Democrats are in a unique position to be forceful. Whereas I do think social programs should have limits, I hardly think Republicans have demonstrated any fiscal responsibility, and certainly can’t speak with any authority on reducing deficit spending. How do you spell hypocrite?

  4. DoctorFaustroll says:

    Take those jobs and shove them along with the heads of the GOP leadership up the cosmic poop chute of supply side necronomics. Let the poor eat yellow cake.

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