With the announcement this morning that the administration has a new proposal to cut spending by $20 billion for the rest of the fiscal year, the liberal blogosphere is generallyagreeing that the final compromise will be about $30 billion in cuts.
Yesterday, the Republican-controlled Michigan Legislature passed a bill that sets a dangerous precedent for jobless workers and continues Midwest governments’ assault on the vulnerable middle class. While the bill would continue extended unemployment insurance for those already unemployed, it cuts the time new claimants can receive benefits -- from 26 weeks to 20. This would make it the first state to go below the national standard of 26 weeks.
A new Wall Street Journal survey is reporting that economists are split over whether the Republicans’ plan to cut $100 billion from the budget will help or hurt the economy, which is surprising after Ben Bernanke, Mark Zandi, and Goldman Sachs all agreed it would. One surveyed economist’s explanation, however, may provide some insight:
"There is no free lunch," said Dana Johnson of Comerica Bank. "Cutting spending does weaken the economy, but it is the right thing to do."
Following the defeat of both the Republican and Democratic budget proposals in the Senate on Wednesday, it seemed both parties had the opportunity to go back to the drawing board and adopt a new strategy. For Democrats, this was the perfect opening to escape the narrow, Republican-enforced confines of a debate on non-defense discretionary spending and look at the bigger picture.
With declining unemployment numbers, rising corporate profits and a growing GDP, many analysts say we’ve reached a turning point in the recovery. The Dow Jones is up 86% from its March 2009 low, private sector jobs are multiplying and export levels are approaching an all-time high. With statistics like these, you could almost believe the Republican argument that trimming billions from the federal budget won’t hurt a recovery.