How to Kill a Recovery…
In a phrase… Vote Republican. Or have an undying love for and fantasize about “trickle-down/Reaganomics”… Or buy into austerity at a time when the economy is fragile. Or remain a silent tea partier when your union job is cut by executive edict of your state’s Republican governor. Or believe that Paul Ryan doesn’t want to privatize social security. Or propose a budget that will slow economic growth by 1-2% for the year and cost our economy 700,000 jobs. Or believe Eric Cantor when he claims that cutting spending should be highest priority during a sputtering recovery.
How about we just believe John Boehner when he says that we should cut spending even if it costs the country three-quarters of a million jobs… “So be it.” But I thought this was all about jobs, jobs, jobs. I guess not.
That’s the easiest way to kill a recovery.
The clear and present danger to recovery, however, comes from politics — specifically, the demand from House Republicans that the government immediately slash spending on infant nutrition, disease control, clean water and more. Quite aside from their negative long-run consequences, these cuts would lead, directly and indirectly, to the elimination of hundreds of thousands of jobs — and this could short-circuit the virtuous circle of rising incomes and improving finances.
Of course, Republicans believe, or at least pretend to believe, that the direct job-destroying effects of their proposals would be more than offset by a rise in business confidence. As I like to put it, they believe that the Confidence Fairy will make everything all right.
But … it’s hard to see how such an obviously irresponsible plan … can improve confidence. Beyond that, we have a lot of evidence from other countries about the prospects for “expansionary austerity” — and that evidence is all negative… – Paul Krugman