Huge cuts could imperil recovery, economists say
The massive federal spending cuts that will follow the deficit reduction deal could further weaken a national economy that has been rapidly losing momentum, economists said.
While few forecast an imminent downturn, they said the withdrawal of hundreds of billions of federal dollars comes at a bad time. Over the past few months, hiring has ground almost to a halt, the unemployment rate has resumed an upward trend, and overall economic growth has been barely positive.
I think at this point the Globe and maybe the New York Times are the only places where folks still think that there *is* currently a recovery. Unemployment is nearly double where it was during the Bush administration; banks and businesses are propped up by the Federal Government as "too big to fail" - and still do; consumer spending is sluggish at best and slipping; in short, the only reason it's called a recovery at all is because Teleprompter Jesus has a (D) next to his name...
It's also interesting to note that they mention how the Great Depression was extended by increasing taxes, yet fail to mention that TJ wants to let the Bush tax cuts expire next year. They of course manage to get their digs in at the (Republican led) Congress, ignoring that they've only been in office for six months as opposed to Øbama's 2.5 years, but hey, what's an article on the lousy economy without blaming the Republicans?
And we won't even get into the chicanery of calling what's happening a spending "cut"...
That is all.
7 comments:
But you see they're not raising taxes, they're just letting those nasty old cuts expire. That is totally different, somehow... yeah it's Bush's fault cause they were his tax cuts.
And the Great Depression was like, sooooo long ago, so what happened then doesn't apply in today's economy....
As if there really were cuts in the first place..... There are no cuts. There are lies in the shape of promises to reduce the rate of growth. No one offered a reduction in spending. They only lied (promised) to not borrow as much. And the stooges in achedemia and the media call for amegedon. And even if there were cuts, they would not take place for more than a year. Do they truely belive that this propagan is working on anyone? Have they succeded in making our nation this stupid? I once lived in a great nation. Oh how the mighty have fallen.
They're like Wimpy from the old Popeye cartoons: "I'd gladly cut spending after the next election (or three) for a debt limit hike today".
Cuts in federal spending, even cuts in the rate of growth, WILL adversely affect the economy in the short term.
If we had a balanced federal budget and every "public sector" penny spent was spent by an equivalent reduction in "private sector" spending power, then reductions in government spending would help the economy because it would result in more money available for private sector investment and growth.
In our situation, however, there will be no opportunity AT ALL for private sector growth until the entire deficit is eliminated.
Reductions in federal spending cannot result in increases in the availability of capital to the private sector, but only decreases in the amount being borrowed.
Decreasing the amount being borrowed does not spur private economic activity, but the decrease in federal spending will result in reduced federal contracts, reduced federal employment and reduced federal wages and benefits.
Thus, overall economic activity will necessarily decrease until the entire deficit is eliminated.
Especially considering that this administration is heaping crippling regulations and edicts on businesses at a record pace.
They are right that significant cuts in federal spending will be very painful for our economy. The point that they miss is that we MUST suffer that pain now or it will be hugely magnified later.
We have a gangrenous limb. Yes, amputation is a radical procedure and will be very painful in the short term, but the alternative is a slow, agonizing and inevitable death.
I must admit I'm baffled, but from reading the Wall Street Journal the people pushing for stimulus #3 are some of the people who got us into this mess in the first place.
I think with two failed stimuli, a debt even larger than when G.W. Bush was President, and no sign of unemployment abating, we can pretty much believe that the paradigm of the past is a total failure.
Just as a technical side note, the cash flow that supplies most of Federal spending comes from where? Yes, Little Billy? Taxes, that's where-a siphon hose in the jugular of the Real Economy.
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