The boasts of Congressional Republicans about their cost-cutting victories are ringing hollow to some well-known economists, financial analysts and corporate leaders, including some Republicans, who are expressing increasing alarm over Washington’s new austerity.So what's the problem? Well, every one of our readers saw this coming, and every one of our commenters said so:
Their critiques have grown sharper since last week, when President Obama signed his deficit reduction deal with Republicans and, a few days later, when Standard & Poor’s subsequently downgraded the credit rating of the United States.
But even before that, macroeconomists and private sector forecasters were warning that the direction in which the new House Republican majority had pushed the White House and Congress this year — for immediate spending cuts, no further stimulus measures and no tax increases, ever — was the wrong one for addressing the nation’s two main ills, a weak economy now and projections of unsustainably high federal debt in coming years.
Washington should be focusing on stimulating the economy in the near term to induce people to spend money and create jobs, while simultaneously settling on a long-term plan for spending reductions and tax increases to take effect only after the economy recovers.As it happens, the Republican House is too extreme for the Reaganites and Bushies in the Republican party, who know they're just, in a word, wrong. And they fear the direction the dialogue is going.
These critics include onetime standard-bearers of Republican economic philosophy like Martin Feldstein, an adviser to President Ronald Reagan, and Henry M. Paulson Jr., Treasury secretary to President George W. Bush, underscoring the deepening divide between party establishment figures and the Tea Party-inspired Republicans in Congress and running for the White House.
That House Republicans were wrong, we knew. But that even fiscal conservatives from former Republican administrations know it, and are increasingly willing to say so on record ... well, that's news. News driven by market fluctuations causing them to lose money, maybe, but news nonetheless.