Don't look now, that tidal wave might be a drop in the bucket instead.
On her MSNBC show Monday, Rachel Maddow cited a trio of reports warning of massive job losses if $61 billion in Republican-pushed spending cuts take effect.
The Economic Policy Institute, which Maddow described as a "liberal group," predicts the GOP budget plan "would likely result in job losses of just over 800,000. A confidential new report" from Goldman Sachs says spending cuts passed in the House "would be a drag on the economy, cutting growth by about two percent of GDP, according to Jonathan Karl at ABC News, the source cited by Maddow. The third warning along these lines came from McCain '08 campaign adviser Mark Zandi, writing at Moody's Analytics, that the Republicans' proposal "would mean some 400,000 fewer jobs created by the end of 2011 ... and 700,000 fewer jobs by the end of 2012."
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Wow -- all that by cutting a $61-billion sliver from a $3.7 trillion behemoth? Well, maybe not, according to Maddow's next guest, Cornell University economics professor Robert Frank --
MADDOW: The Republicans in the House have proposed about $61 billion worth of spending cuts. As you say, the deficit is not a made-up problem. It is worth thinking about that for the long run. Would the kinds of cuts that the Republicans are proposing have a significant impact on the deficit?
FRANK: No, that's the sad thing. The non-partisan Congressional Budget Office projects that over the next four years, we're going to add $3.8 trillion to the deficit. These $61 billion in cuts are just a drop in the bucket.
This is where Maddow should have asked for clarification, given the claims of huge job losses she had previously cited, but she did not. As to be expected, Maddow was also incurious about Goldman Sachs as the source of one of these reports and the curiously timed release to its "clients". This editorial at Investor's Business Daily criticized what it saw as "Goldman Sachs' Suspicious Call" and why the report should be viewed with skepticism --
The revolving door between Goldman and government is well-known. An investigative report last year by CBS News counted "at least four dozen former employees, lobbyists or advisers at the highest reaches of power both in Washington and around the world."
They include former Treasury Secretary Henry Paulson, who crafted the stimulus plan and Wall Street bailouts; former Democratic House Majority Leader Dick Gephardt; and former SEC head Arthur Levitt, who as of last year was a paid lobbyist for Goldman.
No surprise, then, that Goldman Sachs would see even the modest cuts proposed by the GOP as a danger to the economy. With its shifting business ties to government, the cuts would certainly be a danger to them.
Also noteworthy was Maddow's claim, based on Jonathan Karl's reporting at The Note, that the Goldman report states GOP spending cuts would reduce economic growth "by about two percent of GDP."
But this wasn't what the report warns, as excerpted by Karl. (And finding the report in its entirety online proved oddly elusive). Instead, the report says the GOP spending plan would result in a "drag on GDP growth" in the second and third quarters this year of "1.5pp to 2pp" -- percentage points, not percent.
The Goldman report, at least in the sections excerpted by Karl, did not make projections for GDP growth. But assuming a rate of 3 percent, a reduction in 1.5 pp would mean growth was cut in half, not 2 percent. Presumably Maddow is aware of this, however, since earlier in the segment she mentioned GDP growth for the last quarter of 2010 being adjusted downward "half a point."