February 22, 2011
Reid To Boehner: Stop Drawing Lines In The Sand -- Announces Plan To Introduce Short-Term Continuing Resolution To Give Democrats And Republicans Time To Negotiate Responsible Path Forward
Majority Leader Reid Taps Top Aide To Begin Discussions With Speaker Boehner's Office On Long-Term Funding Measure
Washington, DC—Nevada Senator Harry Reid released the following statement today announcing his plans to introduce a clean, short-term Continuing Resolution that will give Democrats and Republicans time to negotiate a plan to responsibly cut government spending:
“Speaker Boehner should stop drawing lines in the sand, and come to the table to find a responsible path forward that cuts government spending while keeping our communities safe and our economy growing. It would be the height of irresponsibility to shut down the government without any negotiations, as Republicans are threatening to do. A shutdown could send our fragile economy back into a recession, and mean no Social Security checks for seniors, less funding for border security and no paychecks for our troops.
“To avoid a shutdown and give us time to negotiate a responsible path forward, I have asked Sen. Inouye, Chairman of the Senate Appropriations Committee, to prepare a clean Continuing Resolution that I can bring to the floor next week. Since this bill is intended to fund vital services like Social Security, our military and border security, it should have no legislation or riders tied to it. This bill will include the $41 billion in budget cuts that Democrats and Republicans agreed to in December, and will keep the government running for 30 days while both sides can negotiate a common-sense, long-term solution. I have asked my chief of staff, David Krone, to begin negotiations with Speaker Boehner’s chief of staff, Barry Jackson, to craft a long-term continuing resolution that cuts waste and excess, while protecting the initiatives that keep us safe, put Americans back to work and keep our economy on the right track.
“It is time to drop the threats and ultimatums, and work together on a path forward. I am asking Speaker Boehner to simply take the threat of a government shutdown off the table, and work with us to negotiate a responsible, long-term solution.”
February 23, 2011
Reid Spokesman: "New" GOP Plan Is No Compromise, It's The Same Reckless Proposal Already Ruled Out As Too Extreme -- House GOP Still Refuses To Budge, Further Risking Government Shutdown
GOP Proposal Is Pro-Rated Version of Same Reckless Proposal That House Passed On Saturday-According To Independent Analysis By Goldman Sachs, GOP Plan Would Reduce Economic Growth By 2 Percent
Washington, DC—Jon Summers, spokesman for Nevada Senator Harry Reid, released the following statement today in response to House Republicans’ plan to pass a two-week Continuing Resolution that includes $4 billion in cuts:
“The Republicans’ so-called compromise is nothing more than the same extreme package the House already handed the Senate, just with a different bow. This isn’t a compromise, it’s a hardening of their original position. This bill would simply be a two-week version of the reckless measure the House passed last weekend. It would impose the same spending levels in the short term as their initial proposal does in the long term, and it isn’t going to fool anyone. Both proposals are non-starters in the Senate.
“Just today, a nonpartisan study by Goldman Sachs found that Republicans’ proposal would drag our economy back into a recession, cutting U.S. economic growth by as much as two percentage points in the second and third quarters. Enacting these draconian cuts over two weeks would mean immediate, devastating impacts to the health of our economy and the safety of our communities.
“Democrats have already proposed $41 billion in cuts and we are eager to sit down with Republicans to find more. But Republicans are refusing to negotiate. Instead of working with Democrats to find more cuts, they are threatening to shut down the government and drawing lines in the sand. Their recklessness could send our economy into a tailspin. It is time for cooler heads to prevail in the House, and for Republicans to come to the table.”
February 23, 2011
House GOP Spending Measure Would Cut U.S. Economic Growth By As Much as 2%, Nonpartisan Economic Analysis Finds
Schumer Responds: Analysis Proves House GOP Proposal is 'Recipe for Double-Dip Recession'
Washington, DC—U.S. Senator Charles E. Schumer released the following statement Wednesday after Goldman Sachs issued an independent economic analysis finding that the House Republicans’ funding measure would reduce U.S. economic growth by 1.5 to 2 percentage points in the second and third quarters of this year:
“This nonpartisan study proves that the House Republicans’ proposal is a recipe for a double-dip recession. Just as the economy is beginning to pick up a little steam, the Republican budget would snuff out any chance of recovery. This analysis puts a dagger through the heart of their ‘cut-and-grow’ fantasy. We need to reduce the deficit, but we must do it by striking the right balance between cutting spending and growing the economy. According to independent economists, the House Republicans’ proposal gets this balance all wrong. The verdict is in on their proposal, and nonpartisan economists give it an ‘F’.”
A report by the Financial Times on the Goldman Sachs analysis appears below.
Goldman warns spending cuts to curb growth
By James Politi and Stephanie Kirchgaessner in Washington
Published: February 23 2011 18:08 | Last updated: February 23 2011 18:08
The Republican plan to slash government spending by $61bn in 2011 could reduce US economic growth by 1.5 to 2 percentage points in the second and third quarters of the year, a Goldman Sachs economist has warned.
The note from Alec Phillips, a forecaster based in Washington, was seized in the ongoing US budget fight by Democrats as validating their argument that the legislation approved by the Republican-led House of Representatives last Saturday would do significant damage to the US recovery.
Chuck Schumer, the Democratic senator from New York, said: “This nonpartisan study proves that the House Republicans’ proposal is a recipe for a double-dip recession. Just as the economy is beginning to pick up a little steam, the Republican budget would snuff out any chance of recovery. This analysis puts a dagger through the heart of their ‘cut-and-grow’ fantasy”.
The Goldman analysis also points out that a potential compromise deal with $25bn in spending reductions this year – a more likely scenario – would lead to a smaller drag on growth of 1 percentage point in the second quarter.
Thereafter it would fade, with “negligible” impact on US output by the end of the year. This could make it harder for Democrats to argue that a more modest dose of spending reductions will have a meaningfully adverse economic impact.
Goldman, which is currently forecasting US gross domestic product growth of 4 per cent in the second and third quarters of 2011, also pegged the cost of a government shutdown to the US economy at $8bn in reduced spending per week, based on the experience of the federal closures of 1995 and 1996.
A government shutdown in the world’s largest economy will occur if Congress and the White House do not agree on a budget measure by the end of next week. Tough rhetoric from Republicans and Democrats has engulfed Washington in recent days, as both sides are positioning themselves for the final round of negotiations and trying to avoid blame if a shutdown occurs.
With Congress in recess, the ideological and political battle over US budget cuts is playing out in state capitals across America, in cities like Indianapolis, Columbus, and Madison.
Democratic state senators in Wisconsin on Wednesday remained in a tense standoff with Republican governor Scott Walker over a proposed budget bill that would severely curtail union rights to collective bargaining. Democratic lawmakers defended their decision to flee the state last week to prevent the proposal from passing, arguing that failure to defeat Mr Walker’s measure would be a devastating blow to unions across the country.
“We are in the battle of our lives against a really right wing agenda. If we can’t do it at this point, we will fundamentally change the character of our country and our state for a generation” said Mark Miller, the top Democratic state senator.
While Republican governors like Mr Walker and New Jersey’s Chris Christie, who is pushing similar changes to union rules, have become heroes to activist conservatives and Tea Party members who believe fundamental changes to state budgets can only be accomplished with sweeping labour reform, public opinion polls show the strategy carries risk.
A Gallup poll released this week showed that 61 per cent of Americans opposed the kind of legislation that was proposed by Mr Walker in Wisconsin and a slim majority (53 per cent) oppose reducing pay and benefits for state workers.
The polling shows that Republicans risk overreaching. At least two Republican governors, Mitch Daniels of Indiana and Rick Scott of Florida, seem to have taken that message on board, and are distancing themselves from efforts to rein in labour unions.
Mr Daniels this week said he disagreed with efforts by Republican colleagues in his state to pass an anti-union measure, and refused to deploy state police to track down Democratic lawmakers who had abandoned the capital to avoid a vote on the measure.
Copyright The Financial Times Limited 2011.
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