We are in a Depression, according to Paul Krugman. And the extremists controlling the House GOP are still demanding even more immediate spending cuts, which is dangerous as hell during an economic crisis.
Decreased spending depresses the economy even more – just look at what happened in England after the conservative government massively cut spending – the economy collapsed and the budget deficit actually got worse. Why? Because when the economy collapses more people are unemployed, which lowers government tax revenue and increases government spending on unemployment and other related programs. Revenue decreases, spending increases, budget deficit increases.
The House GOP’s proposed additional spending cuts will hurt economic growth, and what’s worse, the House GOP isn’t done there. They also think the payroll tax holiday is a bad idea, and they think the unemployment benefits are too large. According to a slew of mainstream economics, including those on Wall Street, the payroll tax holiday and unemployment benefit extensions could be worth as much as 1.5 percentage points of GDP next quarter (meaning that without them, GDP might drop by 1.5 percentage points, which is huge in a depressed economy). That’s what the House GOP wants to get rid of, 1.5 percentage points of GDP.
Let me put this in terms folks can appreciate. A week before Christmas, House Republicans want to increase taxes on every single worker in America, and they want to cut further whatever meager income the unemployed are currently getting. And to top it off, they want to cut spending overall, which will further cut economic growth and increase unemployment even more.
Brought to you by the Tea Party, another name for Gingrich/Armey. It’s 1994 all over again. And yet again, when Republicans are elected to national office, the crazies take over every time.