Slate's David Weigel calls it The Democratic Unemployment Act. The New York Times worries From Spending to Cuts, While the Economy Stalls. The Huffington Post reports Durbin: Debt Deal Will Be The Death Of Keynesian Economics. All three of these stories worry that the massive spending cuts in the debt limit deal will hurt the economy. But what none of these stories report, unfortunately, is just how much government spending actually gets cut this year.
According to the Congressional Budget Office (CBO) score of the legislation, the debt limit deal will cut $25 billion in 2012 and $47 billion in 2013. $25 billion may sound like a lot, but the federal government spends almost $300 billion a month and will spend $3.7 trillion in 2012. $25 billion also amounts to less than .7 percent of all government spending and less than .2 percent of GDP.
Hard-core Keynsian Suzy Khimm claims that a 1 percent of GDP cut to government spending reduced GDP by .5 percent in two years. So at .2 percent of GDP, by Keynsians own numbers, the debt limit deal will lower GDP by .1 percent. That is a rounding error at best.