Bad Economic News And GOP Solutions That Would Make Things Worse

July 29, 2011 11:09 am ET — Jamison Foser

This morning brings grim economic news — and, even more discouraging, a chorus of congressional Republicans offering purported solutions that would make the situation worse.

Here's Reuters:

The U.S. economy came perilously close to flat-lining in the first quarter and grew at a meager 1.3 percent annual rate in the April-June period as consumer spending barely rose.

The Commerce Department data on Friday also showed the current lull in the economy began earlier than had been thought, with the growth losing steam late last year. [...]

Government spending declined again in the second quarter as state and local authorities continued to pare their budgets, even though defense expenditures rebounded at 7.3 percent rate after contracting at a 12.6 percent rate in the first three months of the year.

Nobel Prize-winning economist Paul Krugman spells out the situation:

What's causing the stagnation? A big factor is falling government spending: "government consumption and investment spending" has been falling sharply as the stimulus runs out and state and local governments slash. Anyone talking about fiscal austerity should know that in practice we're already doing it, with the usual results.

So, the economy is terrible and lower government spending is making things worse. Let's see how Republicans are reacting to the news, shall we?

House Republican Policy Committee Chairman Tom Price (R-GA):

"Despite the Obama Administration's promises of robust economic growth following its costly stimulus misadventures, the nation received yet another disappointing report today confirming what the American people already understand - the President's economic policies are an abject failure," said Chairman Price. "The economy, in a predictable fashion, has reacted negatively to not only the Democrats' debt-inducing spending spree but their liberal agenda that puts the priorities of Washington above those of American families and job creators." 

Rep. Dennis Ross (R-FL):

Rep. Gregg Harper (R-MS):

Rep. Jim Renacci (R-OH)

So, amid news that reduced government spending has contributed to a worse-than-expected economy, House Republicans want to dramatically reduce government spending. That's the exact opposite of the right approach.

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