A RECIPE FOR A WEAKER ECONOMY…. If federal policymakers want to make the economy worse, on purpose, all they have to do is approve the Republican agenda. The Financial Times has this report today.
The Republican plan to slash government spending by $61bn in 2011 could reduce US economic growth by 1.5 to 2 percentage points in the second and third quarters of the year, a Goldman Sachs economist has warned.
The note from Alec Phillips, a forecaster based in Washington, was seized in the ongoing US budget fight by Democrats as validating their argument that the legislation approved by the Republican-led House of Representatives last Saturday would do significant damage to the US recovery.
Sen. Chuck Schumer (D-N.Y.) responded to the Goldman Sachs report, saying in a press statement, “This nonpartisan study proves that the House Republicans’ proposal is a recipe for a double-dip recession. Just as the economy is beginning to pick up a little steam, the Republican budget would snuff out any chance of recovery. This analysis puts a dagger through the heart of their ‘cut-and-grow’ fantasy.”
Well, one would certainly like to think so.
Remember, this analysis comes a week after additional research found that the Republican spending cuts could lead to roughly 1 million job losses. (Asked about this, Speaker John Boehner replied last week, “So be it.”)
I’d gladly note the GOP response to all of this, but as best as I can tell, there isn’t one. Republicans don’t know — and by all accounts don’t care — what the economic results would be if their plan was approved. They don’t hold hearings to explore the effects of the proposal, and party officials haven’t offered any economic projections they believe would result from their plan in implemented.
They just want to cut, no matter what it does the country. This isn’t about consequences, it’s about making the GOP base feel good about itself.
We now have independent analyses showing that the Republican spending measure would push the economy back towards a recession and would deliberately make unemployment worse. If Democrats balk, the GOP will shut down the government.
Why this isn’t the lead story in every news outlet in the country remains unclear.
Update: I suppose the next question is why Republicans would pursue a plan they know would slow the economy. Among the possibilities: (1) they fear inflation that doesn’t exist; (2) they have to hurt the country on purpose to undermine President Obama’s re-election chances; (3) they consider the deficit more important than the economy, just on principle; (4) something else? I’d love to understand the GOP’s motivations, but just as importantly, I’d love for the media to press the GOP on its motivations.