Schumer: Forecast proves House GOP budget approach ‘all wrong’

In a statement released Wednesday, Sen. Charles Schumer (D-N.Y.) said those findings proved the House GOP plan was “a recipe for a double-dip recession.”

“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,” said Schumer, who heads up messaging efforts for Senate Democrats. “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.’ ”

The report comes as Republicans and Democrats are engaged in a back-and-forth over federal spending, with a temporary measure to fund the government set to expire March 4. With that in mind, top lawmakers on both sides of the aisle have been positioning their sides to come out on top in the messaging war, should a shutdown actually occur. 

On Wednesday, a spokesman for House Speaker John Boehner (R-Ohio) also fired back at Schumer, saying the New York senator was stuck in an “outdated Washington mindset.”

“We don’t need more ineffective ‘stimulus’ spending — we need to get our economy growing again and help the private sector create jobs,” Michael Steel said in a statement. 

For its part, the Goldman Sachs forecast expressed some skepticism that the House spending plan will become law, even as it measures the legislation’s impact. 

A more likely outcome, the report declares, is a smaller cut in discretionary spending. The analysis found that a $25 billion decrease in spending in the second half of this fiscal year would reduce economic growth by 1 percentage point, though it also predicted that drag would fade over time.

The study also gauges the potential impact of a government shutdown, finding that each week the government is shuttered would reduce federal spending by an estimated $8 billion and could decrease real GDP by as much as 0.8 percentage points in the fiscal quarter it happened. Officials on both sides of the aisle have said they believe a shutdown can be averted.