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RBS Senior Economist Michelle Girard says the sequester’s ultimate effect on GDP might be smaller than expected.
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She joins me now thinks her for coming on Michelle isn't fit you just don't think that cuts are really gonna happen they -- -- down the road or -- cuts happen but they're not bad.
Well I know I did think that they're probably going to going to -- fact -- aides to both sides are just too -- and it worked for days away and so I do think that they are likely to take -- although.
It's not clear how quickly.
For example furloughs that many Diddy bet need to occur if they need occur we'll take place -- -- very important thing.
I guess choosing to keep in -- -- first of all.
The 85 billion in cuts is to budget authority that's not actually the money that is spent and the Congressional Budget Office says that.
Well 85 billion budget authority has to be cut your really talking about half that amount an actual cutbacks in spending because.
Spending the happens that the delay from from authority and the other thing is it.
-- -- -- -- -- On the at some point in this is what's being talked about with respect -- legislation about at the end of the month with the continuing resolution -- they're talking about.
Allowing the content -- agencies more flexibility.
In terms of and sent across the board cuts deciding whether cuts to be I think that -- killed.
Might mean that you're less likely to get furloughs and cut as spending and other less obvious areas.
Now you estimate that the cuts that they go through its 85 billion in the first year -- three and a half trillion dollar.
A budget that's 85 bucks on 3500 seems like nothing but you still even say that we could have GDP growth reduced by zero point 4%.
Mean if that's true Michelle while we just spend ten trillion dollars a year and keep printing money and let the economy really boom is another chance that at some point when you do some cuts.
Economic growth actually -- Up not down why that's the case -- -- of a percent is the strict number.
On the you know what it means in terms of that the changing GDP.
Some -- have larger numbers because they think that multiplier effects of the secondary effects -- greater.
I have to say I'm almost -- -- wonders we kind of hinted at that actually will maybe -- less of an impact and -- there really aren't.
Areas and services that are being cut by the government.
Cash in this environment seems right and I would -- -- take a couple of days -- -- private company -- pick up the slack anyplace that they see that there's -- need -- demand that's going unmet so.
I'm here like I -- think that your right to some extent if it -- -- the private sector.
Will pick up some of the slack and that may under again -- another reason why the ultimate impact -- GP may be smaller.
All right you know well it's nice to hear this from you Michelle Girard.
Vs although kind of --
