Perspective On Sequestration’s Economic Effects
WASHINGTON – Today the American Action Forum (@AAF) is releasing two infographics and a blog post from Doug Holtz-Eakin providing perspective on the likely economic impact of sequestration.
Doug Holtz-Eakin asks what the sequester actually mean for the economy?
If you only tuned in recently, you might think the Western Hemisphere will cease to exist on March 2, one day after sequestration hits. Not true.
Why?
The sequester is an $85 billion cut in a $3.6 trillion annual budget in a $16 trillion economy. That’s a small cut in a huge pie.
The economy is growing at about $630 billion per year. For the sequester to wipe out economic growth – as liberals are now implying – it would have to create roughly 7 times its size in economic impact.
Is that a realistic assumption?
By the same logic, the stimulus would’ve added an additional 5.6 trillion in GDP.
Perhaps if that had been true we would not be having this debate today.
The sequester is still a bad idea. It should be replaced. America needs a “big deal” on deficit reduction that addresses mandatory spending, not merely a drop in the bucket through across-the-board discretionary spending cuts. But how much will the sequester actually affect the economy? We will all be here on March 2nd to watch the Nationals beat the Cardinals.
