Would GOP Austerity Lead to Growth?GOP Austerity Enriches Billionaires at Workers' Expense
Paul Ryan budget as sort of the vision they seem to rally around, although it's a fairly divided Republican Party. But if they could pass the Ryan budget and other legislation they've tried to propose or pass in the House and can't get through the Senate or President Obama, would that lead to growth?
Faux: No. The Republicans, you know, it's all very complicated, and as you say, they're a house divided. But their proposals on the economy really come in three--a package of three. One is a budget that aims at pretty grave austerity, cutting federal spending over the next ten years. The second is tax cuts, tax cuts for the business class and the corporate class. And the third is to roll back the regulation that the Obama administration put in in terms of financial controls and generally to roll back the federal government's role in the economy, except, of course, where it benefits some of their particular financiers.
So we take them one by one. The thing to understand is that in a modern economy, nobody spends, nobody works. And the dilemma that we're in now is that no one is spending. That is, consumers, as we know, are not spending, because they've got credit problems, they've got job problems, and we've got 12 million or so households whose mortgages are below water. In other words, that means that the house that they own is worth less than the mortgage that they owe on it. So consumers aren't spending. And consumers, depending on what you were talking about, are between 65 and 70 percent of the economy.
Business is not spending, because consumers aren't spending. You know, you ask any businessman before or after you get through the sort of initial ideological responses, and you say, well, what is the thing that makes you invest? And of course the thing that makes them invest is customers coming in the door with money in their pocket to spend on their goods. So that's not what's happening. And business is full of cash these days, and they're refusing to invest not because they don't want to invest but because they don't see the customer base for selling new products and services.
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