Congress appears to be on the verge of approving a two-week continuing resolution (CR) that would cut $4 billion from funding for the rest of the fiscal year. Although it is set to expire on Friday March 4, the government is currently operating on a CR that is funding the government at FY 2010 levels. A new short-term CR would extend funding of government operations for two weeks, but only in exchange for additional funding cuts. These cuts would target earmarks as well as programs that President Obama supports reducing. Roughly two-thirds of these cuts would come from earmarks, while one-third would come from spending reductions to eight programs, including Even Start, the Striving Readers program, election assistance grants, and highway funding.
Though this measure is certainly more bipartisan and less harmful than H.R. 1, which included $61 billion in cuts relative to current funding levels, it fails to accomplish what should be Congress’ main priority right now: creating jobs and boosting our labor market. Cutting $4 billion from fiscal year 2011 funding will not put any of the 14 million unemployed Americans back to work, nor will it help boost economic growth. Rather, it represents a move in the wrong direction—at a time when the economy remains fragile and state and local governments continue to cut spending and raise taxes by over $10 billion a month, it is clear that the economy needs more demand from the federal government, not less. Both Goldman Sachs and independent analyst Mark Zandi have recently confirmed our initial assessment that cuts of this magnitude would destroy hundreds of thousands of jobs, while also reducing real gross domestic product growth.
Furthermore, this stop-gap measure is unsustainable because it provides funding for only two more weeks yet includes spending cuts that take place over the rest of the fiscal year. In other words, future efforts to fund the government for the rest of FY 2011 will be unable to use those cuts and must find new ones, making the challenge even more daunting.
This stop-gap measure merely prolongs budget uncertainty without reaching any final decision that will allow government to operate for the rest of the fiscal year. At its best, this stop-gap measure cuts billions of dollars and would lead to tens of thousands of jobs lost. At its worst, it does nothing to prevent—and possibly helps precipitate—a government shutdown, which would be an economic disaster.