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.
