Warnings grow on Republican budget cuts
Federal Reserve Chairman, Ben Bernanke, agrees with many economists, who have warned Republicans in congress not to follow the failed economic policies of European nations who have ruined their economies with deep and sudden spending cuts.
“Bernanke told the Joint Economic Committee that lawmakers face a delicate challenge: They must avoid deep spending cuts that could impede the recovery.”
Senator Max Baucus agrees. “The United States is on a "dangerous path" that could lead to a European-style fiscal crisis, warned the Senate's top tax legislator on Monday,” according to Reuters. “We're on a dangerous path. If we don't act, it could lead towards fiscal crisis like some European countries,” Baucus added.
Economist Mark Weisbrot compares deep budget cuts and austerity measures to “pouring gas on a fire,” and said the European financial crisis created a “self-inflicted recession.”
Cuts in government spending means layoffs of federal workers, which takes spending money out of the economy. When US consumers spend less, demand for goods and services decreases, causing further economic contraction.
With deep budget cuts, Republicans are actually selling more unemployment under the auspice of ‘smaller government.’ But in reality, the policy is in complete contrast to proven methods to stimulate job growth.