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News from EPI The debt ceiling deal’s net impact on jobs

For Immediate Release: Friday, August 5, 2011
Contact: Phoebe Silag or Karen Conner, 202-775-8810

The debt ceiling deal’s net impact on jobs

Today’s Snapshot explains that the agreement to raise the debt ceiling will result in 1.8 million fewer jobs.  The loss of the payroll tax holiday, a tax cut that reduces Social Security payroll tax for all workers, would lead to a reduction in GDP of $128 billion and roughly 972,000 fewer jobs in 2012. Allowing extended unemployment insurance to expire would hurt those who have already taken the hardest hit, reducing GDP by $70 billion and further reducing employment by roughly 528,000 jobs in 2012. Finally, the near-term discretionary cuts ($30.5 billion in calendar year 2012), will have an immediate impact of reducing GDP by $43 billion and leading to roughly 323,000 fewer jobs in 2012.

For more on the debt ceiling deal’s net impact on the labor market, see the EPI issue brief Debt ceiling deal threatens deep job losses and lower long-run economic growth and the statement by EPI’s John Irons, What’s missing from the debt ceiling debate? Jobs.