American Spectator: Don't Stop the Fiscal Sanity Now!

Thursday, 03 Oct 2013 08:45 AM

By John Morgan

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The federal government is undergoing the biggest fiscal retrenchment since the end of World War II, although many people have been blind to it, and the result will a great boost to the economy, The American Spectator predicted.

The Spectator estimated federal spending has dropped by 3.1 percent of GDP since 2011 when Republicans took control of the House, that state and local government spending has dropped by 1 percent of GDP during the same time period, and now the federal deficit is falling as a result.

“For liberals who thought that Barack Obama’s second term would mean a 21st-century Great Society spending binge such as we saw from 2009 to 2011, this is a brutal reality,” the magazine said. “For Keynesians who believe that government spending cuts are ‘austerity,’ this is also miserable news.”

Editor's Note ‘I Wish I Were Wrong’ — Economist Laments Prediction. See Interview.

The Spectator said its analysis showed that when government spending rises, so does unemployment. Conversely, when government spending declines, the number of jobless Americans also declines. It used data from the Bureau of Economic Analysis and the Bureau of Labor Statistics to show how spending and unemployment from 1970 to 2013 tracked each other closely.

“Raising taxes on workers and increasing payments to non-workers is why we had the Great Recession and the lousy recovery in the first place,” the Spectator said.

Progress in reducing the deficit and government spending has been coming precisely because the Republican House muscled the White House and Democrats into accepting spending caps, according to the magazine.

“This is the fiscal buzz saw for the army of special interests and unions that depend on government largesse for their survival.”

The Spectator claimed that if it hadn’t been for President Barack Obama’s “insistence on higher tax rates on everything that walks, crawls, swims, flies or digs, our economy would be soaring.”

Writing in USA Today, House Speaker John Boehner, R-Ohio, said Congress must soon decide whether to raise the debt limit “to pay the tab for President Obama and Washington’s out-of-control spending.”

“There is no way Congress can or should pass such a bill without spending cuts and reforms to deal with the debt and deficit and help get our economy moving again,” said Boehner.
President Obama claimed the only purpose of the current government shutdown is because Republicans are trying to destroy Obamacare before it can get off the launch pad.

Editor's Note ‘I Wish I Were Wrong’ — Economist Laments Prediction. See Interview.

"I'm not going to allow anybody to drag the good name of the United States of America through the mud just to refight a settled election or extract ideological demands," the president said, according to CNN.

"Nobody gets to hurt our economy and millions of hard-working families over a law you don't like."

Related stories:

Lawrence Lindsey to Moneynews: Government Will Likely Shut Down for 'Short Period'

Investor Jim Rogers to Steve Malzberg: Fed’s Money-Printing Binge Making Stocks Artificially High





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