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First the bad news — the ultra conservative Tea Party faction has effectively manipulated the Republican majority in the House of Representative. Now for the really, really bad news — policies espoused by Republicans and Tea Party reactionaries are going to make matters worse, much worse.
Here are two ugly facts. One: We are in a recessionary period caused by the near collapse of our financial system. Two: Financial recessions generally take a long while to resolve themselves (think five or ten years) and employment tends to improve even more slowly than the economy. A lot of economists have pointed this out. Harvard economist Kenneth Rogoff, along with Carmen Reinhart, published a big thick book back in 2009, This Time Is Different, surveying eight centuries of financial crises. Century after century the story has been about the same, but each generation of fools thought their own financial recession was different.
Now Tea Party people and other reactionaries apparently don’t know this. Rogoff’s book is heavy with statistics, which may explain why no one in the Republican party seems to have read it. On the other hand, they may understand economics, but want to make sure that things stay bad enough to assure a Republican candidate wins the next election for President.
If you haven’t been driven mad by endless shouting about the deficit, you may recall that most of the new Republican House members swept into Congress with cries of, “Jobs! Jobs! Jobs!” But after taking their oath of office, those same new congressmen and congresswomen cried, “Cut the deficit!” They claimed “the people” had sent them to Washington “to put our fiscal house in order.” No poll ever found that “the people” believed cutting the deficit was more important and creating jobs. But Republicans got their way.
Cutting the deficit does absolutely nothing for creating jobs now. On the contrary, cutting the deficit cuts jobs.
Our last-minute Budget Control Act of 2011 requires $917 billion in initial deficit reductions over 10 years, including $350 billion from the base defense budget. The slicing is spread all around for a decade, but it starts right away. Fiscal 2012 begins in less than two months, which means that agencies of government from the Pentagon to the Environmental Protection Agency are now scrambling to find where they can cut.
Here’s a gruesomely relevant page from history. In 1937, as the United States began to emerge from the Great Depression, President Roosevelt’s advisors convinced him to cut spending and balance the budget. So the government cut workers from the Works Progress Administration, and Public Works Administration projects were brought to a halt. Republicans rejoiced that the nation was putting its fiscal house in order. Manufacturing collapsed 37 percent, and from 1937 to 1938 unemployment rocketed from 14 percent to 19 percent. Consumers cut back on their spending and in response production fell even further. (more…)