GOP austerity economics is undermining the economy

Posted by AzBlueMeanie:

Greg Sargent makes an astute observation in the The Morning Plum today:

It’s been widely pointed out by liberals
that much of the discussion of fiscal issues conducted by supposedly
“neutral” reporters actually does take sides in a pernicious way. It
often treats it as a given that near term deficit reduction is a good
thing — sometimes even cheerleading for that outcome – when in fact there is an actual policy dispute over this point,
with many arguing that immediate deficit reduction is destructive to
the recovery, and that dealing with the deficit should be deferred until
the economy is stronger.

And that’s why today’s
big New York Times piece quoting a range of economists arguing
that Washington’s deficit obsession has proven a drag on the recovery

is so important and welcome. The piece states clearly and
unequivocally that the consensus view among economists is actually the
one that’s often marginalized — i.e., that short term deficit reduction
and spending cuts hurt the economy:

The nation’s unemployment rate would probably be nearly a
point lower, roughly 6.5 percent, and economic growth almost two points
higher this year if Washington had not cut spending and raised taxes as
it has since 2011, according to private-sector and government
economists
.

After two years in which President Obama and Republicans in Congress have fought to a draw over their clashing approaches to job creation and budget deficits, the consensus about the result is clear: Immediate deficit reduction is a drag on full economic recovery.

NYT Chart
New York Times

Now it’s true that Obama and Democrats are heavily complicit in the
2011 decision to agree to a big deficit cutting deal that continues to
harm us to this day (though it’s an open question whether Obama had any
choice). And it’s also true that Obama and Dems agreed to end the
payroll tax holiday, another drag on the recovery.

But the simple fact remains that even if Obama continues to flirt
with deficit-obsessed rhetoric and continues to push for some spending
cuts, he wants more stimulus spending and wants deficit reduction to be
balanced via higher revenues from the wealthy, while Republicans are
pushing solely for still more spending cuts. The Times comes as close as
possible to flatly stating that one side’s approach is far
more threatening to the recovery than the other’s is
:

In all this time, the president has fought unsuccessfully
to combine deficit reduction, including spending cuts and tax
increases, with spending increases and targeted tax cuts for
job-creation initiatives in areas like infrastructure, manufacturing,
research and education. That is a formula closer to what the economists propose. But Republicans have insisted on spending cuts alone and smaller government as the key to economic growth.

Today, House Republicans are expected to pass a measure that would allow the
Treasury to pay off bondholders without a debt ceiling hike, a move
designed to set the stage for Republicans to try to use the debt limit to extort still more spending cuts. As the Times puts it, economists see this idea as “dangerous.”

The shrinking deficit shows clearly that Congress could very easily be spending more to alleviate the unemployment crisis without hurting the country’s near term fiscal outlook.
But Congress isn’t doing that. And so, it’s often said that
“Washington’s” deficit obsession is holding the recovery back, which is
certainly true. But it’s worth stating as clearly as possible that
according to the broad consensus of economists, one party is far more of
a threat to the recovery than the other is
.

As Steve Benen notes, A familiar economic foe:

We're dealing with self-inflicted wounds, but they've been inflicted almost entirely by one side of the partisan divide.

That's
the bad news. The good news is, the problem is incredibly easy to fix.
Congress could, for example, turn off the sequestration cuts and remove
the threat of default. It would take five minutes and immediately boost
our economic prospects. Lawmakers could also invest in infrastructure
and extend federal aid to prevent public-sector layoff at the state and
local level, and we'd see unemployment at around 6.5% by the fall.

This
won't happen, of course, because congressional Republicans oppose
public investments and want more of the policies that are undermining
our economy.

It's why we can't have nice things.

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