Following up on the last item, the U.S. economy grew in the second quarter at an anemic 1.3%. The two previous quarters were revised downwards.
Maybe someone should do something about this.
I realize it’s fallen out of fashion to talk about things such as economic growth and job creation, and it’s apparently far too late for a conversational detour, but it’s worth appreciating the jaw-dropping disconnect between what’s needed and what’s being discussed by policymakers.
With unemployment rising and growth stuck in neutral, Republicans proudly declare, “Austerity for everyone!” But we know austerity doesn’t make things better, in large part because it’s not supposed to. That’s the point of austerity — to impose pain and sacrifice, not to grow and flourish.
We can already see the results at the state and local level, where officials have been forced to cut spending, scrap public investments, and lay off thousands of public-sector workers. The more states cut back, the worse off they are. (Much of this was mitigated by the Recovery Act in 2009, which delivered significant aid to states, but those funds have been exhausted.)
GOP officials are desperate to expand this campaign. Democrats, assuming the Republican hostage strategy is not a bluff, are trying to shape a package of cuts that will make the economy worse, but not quite as bad as the GOP plan. And if Republicans aren’t satisfied, they’re prepared to crash the economy deliberately.
Indeed, I assume Republicans will see the new GDP numbers and say, “See? It’s time to try things our way.”
What will go largely overlooked is that we already are trying things their way. Whether the GOP wants to admit it or not, the economy is advancing exactly as they want it to. The private sector is being left to its own devices; the public sector is shedding jobs quickly and scrapping investments; and the only permitted topic of conversation is about debt-reduction.
This is the script the GOP wrote. When it’s followed to the letter, Republican complaints are absurd.
It doesn’t have to be this way. We can boost public investments. The Federal Reserve can stop worrying about inflation that doesn’t exist. We can stop pretending spending cuts can create jobs.
We know what we should do. The country needs the wisdom and courage to do the right thing, but as of today, with the recovery faltering, the right thing isn’t even on the negotiating table.
What is on the table is a choice between default and competing plans to take massive amounts of capital out of the economy on purpose.
