College of Economic Knowledge
Class is in session……..
Here a cut….there a cut….everywhere a cut, cut……..the news is just crammed with this story or that….this program needs a cut or that…….nut what is the truth?
A little history from the way back machine (a time machine of TV fame)…..
We all know the story of the days before and after the Great Depression, whether you think FDR was right or wrong, we did come out of the depression in a much better place than it began….But…….
In economic terms, it’s the New Deal on steroids. The top tax rate goes up to 91 percent. Nonetheless, government spending is so high that by 1945 the deficit is 123 percent of GDP. Unemployment is ended by employing 16 million people directly in the armed forces and millions more producing war material and supporting the military.
The Great Depression is finally over.
When taxes were raised the economy improved. Every time. Deficits had no negative effect on the economy. Indeed, when deficits were at their highest, the economy boomed.
After spending was cut — to balance the budget — a recession immediately followed. When taxes were raised and government spending resumed — with deficits — that recession ended.
When taxes were raised again, and government spending went sky high, the Great Depression finally ended. (Thanx to Political Wire for the reports)
Most creditable economist say this is not the time for massive spending cuts….and the nickle and dime stuff of the GOP is just plain moronic……you will NOT get the deficit under control by attacking NPR or Planned Parenthood or a program for infant children….in other words this is all a pack of tightly packaged CRAP!
The GOP promises of deficit reduction is a FRAUD! Why else would abortion, marriage, etc be more important than immediate work on the budget? People! It is a FRAUD!
Recently a company that got its “fair” share of the bailout money, Goldman-Sachs, has said in a report that spending cuts would hurt a fragile recovery….and they are not alone in those findings……
Just after a Goldman Sachs report predicted that proposed House Republican budget cuts would hurt economic growth, a new Moody’s report finds the same.
Key finding: “The House Republicans’ proposal would reduce 2011 real GDP growth by 0.5% and 2012 growth by 0.2 percentage points This would mean some 400,000 fewer jobs created by the end of 2011 and 700,000 fewer jobs by the end of 2012.”
Furthermore, the report claims “a government shutdown lasting longer than a couple of weeks would do much more damage to the economy.”
We can ignore a lot of things but this report CANNOT be ignored…..
The spending cuts in the Republicans’ budget proposal would cost the country up to 700,000 jobs and hurt the country’s economic growth, according to Moody’s chief economist. Mark Zandi estimates that the proposed budget would reduce GDP growth by 0.5% in 2011 and another 0.2% in 2012, hurting job creation, Politico reports. “While long-term government spending restraint is vital,” Zandi wrote, “too much cutting too soon would be counterproductive.” The economy is currently adding 100,000-150,000 jobs a month. But Zandi says that until that figure hits 200,000, significantly cutting spending “would be taking an unnecessary chance with the recovery.” John Boehner scoffed at the report. “The fact that a relentless cheerleader for the failed ‘stimulus’ refuses to understand that ending the spending binge will help the private sector create jobs is sad, but not surprising,” he said. But Zandi isn’t the first economist to make the case. A Goldman Sachs analysis last week concluded that the House plan would cut economic growth by 1.5%-2% this year.
How much more evidence do you need? Cuts bad…to put it in terms that are easily remembered…..but if you need to do some research (and God I hope you will) then try this…..politifact.com/subjects/feder…..
These companies have NO reason to lie….ergo the GOP plan is a FRAUD! The world will NOT end!
Pay attention! Things can get worse and they probably WILL!
