Political Animal

Blog

July 15, 2011 9:25 AM CBO and Fed agree: cuts would weaken economy

By Steve Benen

Yesterday, Douglas Elmendorf, director of the nonpartisan Congressional Budget Office, explored in some detail the effects of a deficit-reduction package. His comments generated almost no media attention, which is a shame because they seem rather important.

Elmendorf argued that, in the medium and long term, small deficits could improve economic output. But what about now, in the short term, when the economy is struggling badly?

In the short term, while the economy is relatively weak and economic growth is restrained primarily by a shortfall in demand for goods and services, the policy would decrease the demand for goods and services even further and thus reduce economic output and income. [emphasis added]

The CBO director’s comments came the same afternoon as Federal Reserve Chairman Ben Bernanke reminded Congress that the recovery is still fragile, and that “sharp and excessive cuts in the very short term would be potentially damaging to that recovery.”

Let’s recap, shall we? The economy is weak, unemployment is inching higher, and the public desperately wants policymakers to focus on making things better. Republicans are demanding steep spending cuts, and pushing to have the cuts take effect immediately. The Federal Reserve and the Congressional Budget Office, on the same afternoon, argued publicly that the GOP plan would likely weaken a struggling economy.

I often struggle to understand exactly why major news organizations make the decisions they do, but shouldn’t this be a huge story? Shouldn’t news outlets at least notice that the Fed and the CBO are warning the public that the Republican Party’s top priority will make an already-weak economy even worse?

Doesn’t that seem like the sort of thing Americans might want to know right now? You know, before there’s a deal to slash spending to satisfy the GOP’s hostage strategy?

Steve Benen is a contributing writer to the Washington Monthly, joining the publication in August, 2008 as chief blogger for the Washington Monthly blog, Political Animal.

Comments

Post a comment
  • Steve LaBonne on July 15, 2011 9:32 AM:

    Maybe Obama and Harry Reid should know about it too. Could somebody please tell them?

  • c u n d gulag on July 15, 2011 9:33 AM:

    Steve,
    Why should the networks carry this?

    The Republicans already have a gun to the hostages head.

    The fact that the hostage's houses will burn down if they're freed in the future isn't as sexy as Cantor ('The Little Engine That Could) v. Obama (The Big Train) in a 'Steel Cage Death Match.'

  • jcricket on July 15, 2011 9:33 AM:

    Perhaps the Powers that Be of the media also want to sabotage the economy.

    Think of the headlines that constant angst would produce.

  • pokeybob on July 15, 2011 9:35 AM:

    What??? The lamestream libtard media did not cover the Commie CBO? Where's Paul Rever when you need him?

  • jlt on July 15, 2011 9:35 AM:

    Yes , Steve, it should be the story..Then again who owns the networks and the papers?

  • Norbert on July 15, 2011 9:36 AM:

    Why should anyone listen to socialist class warrior radicals like Elmendorf and Bernanke? Even their names sound Islamo-Kenyan.

  • Jon on July 15, 2011 9:39 AM:

    They didn't have enough inches left for the story after they went over the dozen different versions of Cantor feeling hurt by Obama. Priorities!

  • kevo on July 15, 2011 9:39 AM:

    I wonder, was Snidelee Whiplash a Republican in the tradition of our current buffoons wearing such a label?

    I think it legitimate to wonder such a thing as these Republicans have become very bumbling as of late in what seems to be the tradition of cartoon villains! -Kevo

  • c u n d gulag on July 15, 2011 9:41 AM:

    pokeybob,

    Rever's still busy explaining our 2nd Amendment rights, and how they better respect it, to the British.

    Also, too - ridin' a horse and a'ringin' that Liberty Bell!

  • c u n d gulag on July 15, 2011 9:44 AM:

    pokeybob,

    I guess your "e" key did what mine did when I was trying to write "Revere."

  • bigtuna on July 15, 2011 9:45 AM:

    I don't see much of the MSM, but Steve, STeve, Steve. On ABC Nightline Wed night, the three stories were:

    1. British -hacking- tabloid scandal - with a fair bit of time devoted to something tangetial that .... Hugh Grant did.

    2. Women who preserve their virginity and "marry" Jesus -

    3. A brief story about Seth Meyers.

    Last night?
    1. A story about a teenager that has a sleep disorder
    2. Roller Derby
    3. A story about beach chairs and an alleged disagreement between brits and germans on this weighty subject

    21 minutes/night of content, and this is what ABC could come up with ....

  • DAY on July 15, 2011 9:49 AM:

    At West Point the men and women are taught how to fire a gun. They are also taught strategy and tactics- along with mathematics, history, and english composition.

    Too many elected officials (I'm lookin' at YOU, TeaParty) are handed a gun and sent off to Washington, with the vague instructions to "Fire at will."

    (Boot Camp for newly elected congressmen consists of marching in step and how to pick up the corporate cash.)

  • T2 on July 15, 2011 9:56 AM:

    Waiting for the Media to tell the Public that the Republican Plan will ruin the country?
    You'll have a long wait. You see, I'm still waiting for the Media to tell the Public that Tax Cuts for the Rich will skyrocket the deficit. That Iraq wasn't behind 9/11, that "Hands OFF" the Financial Sector will lead to disaster.
    Nah, the Media is the #1 Blame for pretty much all the crap we now own. Don't expect them to put that in a headline any time soon.

  • walt on July 15, 2011 9:59 AM:

    Steve LaBonne asked the question at the outset that seemed to arouse not an iota of curiosity among his esteemed colleagues here this morning. It's not just Republicans and their corporatist media pals who ignored the CBO report. It was the Democrats, too. Indeed, Obama has been doing somersaults advancing the Republican meme that deficits are our real issue, not economic growth, not jobs, not the bad labor policy and trade deals. No, just the entire right-wing bullshit Wurlitzer that puts liberalism as we've known it on a death watch.

    At some point, we need to put our pom poms down and hold our side's feet to the fire. Just a suggestion.

  • DK on July 15, 2011 10:08 AM:

    Would we even be talking about the debt ceiling if the republicans had the White House?

  • cmdicely on July 15, 2011 10:26 AM:

    I often struggle to understand exactly why major news organizations make the decisions they do, but shouldn’t this be a huge story?

    The source of your problem is the mistaken belief that there are such things as "major news organizations", at least in the U.S. What are mistaken for "major news organizations" are divisions, usually fairly small compared to the whole, of major, for-profit corporations controlled largely by the same people who pay the Republican Party to pursue the policies that it pursues. The purpose of those organizations is not to present the news, it is to pursue the shared interests of the people who control the corporations that own them, which those people have largely determined are represented by the policies Republicans are pursuing. So, naturally, they serve those interests by distorting their coverage to favor those policies as much as is possible, limiting that only when it appears to compromise the other interests of the corporate overlords (like profits) more than is warranted by the perceived benefits in advancing their political interests.

  • zandru on July 15, 2011 10:30 AM:

    But This is Just Perfect

    Don't you see? The severe and immediate cuts that the Republicans have demanded as a condition for increasing the debt ceiling will tank the economy. This sets up the narrative that it was Obama's insistence on spending, spending, spending, so that Republicans had to reluctantly go along with increasing the debt ceiling, was what crashed the economy.

    After all, it's not like Americans will hear any different, will they?

    "specified datents" - better put that one on my iCal...

  • Diane Rodriguez on July 15, 2011 10:38 AM:

    If Elmendorf was holding up a sign stating "I want my country back", had a tea bag pinned conspicuously to his clothing and a group of less than 10 followers boy howdy there would have been wall to wall coverage.

    Good interview from Bill Moyers last night on Maddow in re: large media conglomerates. Smart old coot.

  • Bartender on July 15, 2011 11:17 AM:

    This shouldn't be any surprise as to the timing of the Republicans debit reduction fight tied to raising the debt limit. It's another radical attempt to box Obama in a corner to further erode the Democratic base (united we stand, divided you fall) with entitlement cuts that they would NEVER force on a Republican president. As to their spending only reduction fight, PLEASE name me one sustained period in the last fifty years where the Republicans were able to sustain a period of growth without raising taxes (i.e. revenue) at some point within that period. They simply don't know how to run a economy. Which party has consistantly increased our federal debt? Which party took trillions of dollars off the federal books to finance two wars, and a new Medicare entitlement just to increase their chances of winning the 2004 election? Which party has consistantly outspent the Democrats? Republicans speak like they know how to run an economy with all their "I ran a business" talk as if running a business had anything to do with being prepared to run a country. They are simply too entrenched in their trickle-down unproven ideals that they can't see the water for the drips that, unless they backoff their Tea Party radical intransigence, will dry up on August 3rd.

  • DisgustedWithItAll on July 15, 2011 3:38 PM:

    "I often struggle to understand exactly why major news organizations make the decisions they do, but shouldn’t this be a huge story? Shouldn’t news outlets at least notice that the Fed and the CBO are warning the public that the Republican Party’s top priority will make an already-weak economy even worse?"

    The reason major news organizations make the decisions they do is because they're as ignorant about economics as the people they're trying to inform. And they're as worried about pissing off "the other side" of an issue as politicians. There's no functioning media in the country any more because there's too damned much of it. They're all busy trying not to get too far from what the center has become.

    Banana Republic here we come.

  •  
  •  
  •