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Aug 03 2012

You Know It’s Bad

(10 am. – promoted by ek hornbeck)

You know it’s bad when even the neo-conservatives admit it.

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.

Would somebody please wake up and smell the coffee?  

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