The White House is assuming, under its new deficit proposal, that the American economy will back back on its feet 16 months for now. According to a White House press releases, issued today, the proposed new cuts wouldn't kick in until 2013, when the economy will be growing stronger.
"[D]eficit reduction phases in starting in 2013, as the economy grows stronger."But who thinks the economy will be growing stronger in 2013, which is only a little more than a year away? In fact, what Stiglitz and Krugman have both warned about is a malaise that continues for years and years to come.
If significant cuts kick in while the economy is still on life support, or at the very best, lame, this plan - any budget cutting plan - could do significant harm to the economy.
Why is that not being acknowledged in this plan? The plan ought to have a safety valve that puts cuts (and possibly tax increases as well) on hold if the economy is not "growing stronger" by a set amount. Meaning, cuts only kick in if GDP is growing at a rate of more than, say, 5% a year.
We're still playing the Republican game of telling the American people that near-immediate cuts are a-okay when they're not at all.
