American Enterprise Institute: Austerity Hurting Economy

American Enterprise Institute: U.S. Austerity Measures Hurting Broader Economy

Austerity lovers of the world take note: Cutting government spending hurts the economy and it's not just the Paul Krugmans of the world that say so.

The American Enterprise Institute, a conservative-leaning think tank, has some data out indicating that cutting government spending may be off-setting private sector growth. That's notable, especially when coming from an organization with the motto "Freedom. Opportunity. Enterprise."

Public sector GDP -- a measure of the goods and services produced by the government -- has shrunk for eight consecutive quarters, according to AEI. At the same time, private sector growth has increased for 12 quarters in a row, indicating that America’s slow overall GDP growth may mostly be a result of a drop in government spending.

In just the last year, federal spending has fallen more than 3 percent, and the cuts may be countering private-sector growth, the Wall Street Journal reports.

The findings show that slashing government spending may not exactly be the best way to boost the economy, even though that’s exactly what lawmakers around the world are considering. That some of the data comes from conservative-leaning AEI adds fuel to the arguments of progressive economists, who argue that painful austerity measures don’t help economies in trouble; they hurt them.

The findings also do some to discredit conservative economists like Mitt Romney advisor Glenn Hubbard, who argue that cutting federal spending would boost a lagging economy.

http://www.huffingtonpost.com/2012/07/3 ... f=business

Oh, no... What do you do when you can't even get the American Enterprise Institute, that bastion of conservative thought, to go along with your dumb austerity/cut-the-budget-at-any-cost Kool-Aid? Must be filled with RINO's....

You guys are going to need a LOT more teabaggers.... rofllol

Brilliant, not!

Of course, spending money you don't have and adding debt that won't be paid for years will help the current economy, especially if you can borrow for 30 years at 3%.

...but what happens when it comes due? Or when the Fed has to pay back those short term 1% loans with money they bought at 7% like Greece & Spain are currently paying?

I read Krugman on Sunday in the Denver Post and he was pushing for more stimulus spending because of how cheap money is right now not only here but in stable countries like Japan.
But I think short term debt isn't the way to do it.

This article isn't from Krugman or about Krugman... It simply substantiates that much of what Krugman says is true...from a conservative-leaning think-tank.

All you see is debt money that "someone has to repay", and it's NOT a zero-sum game. Spend the money in the right places; use the debt to create jobs, and it pays for itself in terms of jobs, revenues paid in, and prosperity for more than just the top 1%....Oh, sorry, the "job-creators"...

Well, Obama, Pelosi, and Reid spent mad amounts with Republican permission, and "W" added to the debt load extensively but still unemployment is at 8.2%.

Of course, since we don't have a control American economy, unemployment might have been 20% if the finance and auto industry hadn't been bailed out.

Well, you got to use "Obama, Pelosi and Reid" in a sentence... But what's that got to do with the American Enterprise Institute's research that says the teabagger's austerity crap is killing the country?

American Enterprise Institute: U.S. Austerity Measures Hurting Broader Economy

Austerity lovers of the world take note: Cutting government spending hurts the economy and it's not just the Paul Krugmans of the world that say so.

The American Enterprise Institute, a conservative-leaning think tank, has some data out indicating that cutting government spending may be off-setting private sector growth. That's notable, especially when coming from an organization with the motto "Freedom. Opportunity. Enterprise."

Public sector GDP -- a measure of the goods and services produced by the government -- has shrunk for eight consecutive quarters, according to AEI. At the same time, private sector growth has increased for 12 quarters in a row, indicating that America’s slow overall GDP growth may mostly be a result of a drop in government spending.

In just the last year, federal spending has fallen more than 3 percent, and the cuts may be countering private-sector growth, the Wall Street Journal reports.

The findings show that slashing government spending may not exactly be the best way to boost the economy, even though that’s exactly what lawmakers around the world are considering. That some of the data comes from conservative-leaning AEI adds fuel to the arguments of progressive economists, who argue that painful austerity measures don’t help economies in trouble; they hurt them.

The findings also do some to discredit conservative economists like Mitt Romney advisor Glenn Hubbard, who argue that cutting federal spending would boost a lagging economy.

http://www.huffingtonpost.com/2012/07/3 ... f=business

In case you missed it....

Essentially the theory of the TEA Party says we would prefer the Feds stop taking all of our money in taxes and even the money available for people to invest in expansion and spend it on what often doesn't make the most sense like paying $27 per gallon for biodiesel for the US Navy.
When you are promised 1% risk free and tax free from Bernanke it sucks all the capital out of the system.

That's your opinion... Apparently the American Enterprise Institute studied it and came to a different conclusion... (Guess which one I care more about...)

I could care less what the teabaggers think.

I guess this is the proof LJ needs- we should just keep on spending!

We spent 3.8 trillion this year- maybe we should just spend even more!

I don't need "proof"... I can read what the Amercian Enterprise Institute's report said. That just reinforces what I already knew.

Apparently, the ones that need "proof" are the teabaggers....And I could care less what the teabaggers think. Go parrot your "cut, cut, cut" stuff to somebody who cares...(Or just bounce it back and forth in your own echo chamber.)

If we are going to spend like crazy, lets at least give it to the people who have had to suffer under 3.5 years of a Obama recession. A couple thousand dollars to all Americans would stimulate the economy more than investing in overseas green energy companies.