Will we ever learn from history? In his first term as president, Franklin D. Roosevelt produced a strong economic recovery from the Depression. Then government decided to cut spending and balance the budget, throwing the economy back into recession.
Today’s Tea Partiers are doing it all over again. Intelligent business leaders know that cutting government spending now is lunacy, but many Americans do not. On Aug.18, Morgan Stanley stated that both the U.S. and Europe are “dangerously close to a recession,” citing pursuit of this wrong-headed policy on both sides of the Atlantic.
The stock market promptly tanked. Congress’s debt-ceiling/expenditure-cutting deal, along with their failure to extend unemployment benefits and the payroll tax holiday, will reduce GDP by $241 billion and remove 1. 8 million jobs from the economy in 2012 (Economic Policy Institute), exactly the problem Morgan Stanley cited. Cutting government spending doesn’t create jobs or grow the economy; it does the opposite.
The Tea Party Republicans have it exactly backward. Our economy needs employed people to create demand for goods and services.
