the tea party understands zilch about economic growth.
austerity has never lead to growth.
we need growth to effectively overcome deficit/debt issues
they held us hostage with their dunderheaded approach to economics, and we were downgraded.
I completely blame them. Had they given an inch and taken their mile that was offered, a better bill would have been passed and no downgrade.
drawing lines int he sand at the eleventh hour is not good governance. this is not a movie or a radio-talk show cockfight, its a complex economy.
That is not necessarily true in the long run. Austerity doesn't directly create growth, but it can help to stop long term growth loss.
That's not to say that I am in favor of the bill, because I'm not. If you are going to make cuts, it has to be to entitlements, because cutting those programs will not adversely affect economic growth like cutting discretionary spending will. Of course, that's a pretty heartless thing to do in times like these.
On the other hand, tax cuts of any kind, but especially on corporations or the middle class, absolutely cannot be ended in times like these. Our fiscal policy, like you said, needs to be pro-growth, not anti-spending. I do not adhere to Keynesian economics by any stretch of the imagination, but no levelheaded economist would try to argue that massive spending cuts or tax hikes wouldn't hurt economic growth, because they will.
A familiar case study to me is the economy of Virginia, which has done surprisingly well over the past few years due to the pragmatic approach of Bob McDonnell. He didn't raise any taxes, and cut spending in areas that wouldn't hurt job creation. As a result, the state unemployment rate is around 6%. Not fantastic, but much better than the national average. He took office promising to get people back to work in a responsible, fiscally conservative way, and it worked. That's the kind of approach we need to take on the national level.
Massive fiscal stimulus programs aren't going to help the economy's long term prospects. (No, making the stimulus bigger wouldn't have helped either, it only would have further delayed the eventual regression to higher rates of unemployment). Both parties are at fault here, because they are both have fixated on solutions that won't work. The Tea Party thinks that massive spending cuts will create short term growth, which goes against just about every economic principle out there. The Democrats think that massive stimulus will help us climb out of the recession, but it will only artificially deflate unemployment for a short time.
In reality, there is no silver bullet. Congress has to realize that they aren't going to be able to fix the economy. It's just not going to happen. The only thing they can do is make conditions as good as possible for long term economic growth.
