Collective Conscious

Benen:

Wolf Blitzer noted “they’ve had some rad­i­cal cuts in Britain and else­where and Europe as well. And folks aren’t happy about it, but they have no choice.” Mor­gan said:

“And here’s a fas­ci­nat­ing par­al­lel. Britain has been through this exact kind of conun­drum a few months ago. And David Cameron’s gov­ern­ment decided that they would go the Repub­li­can route. They would slash the deficit by cut­ting pub­lic spend­ing. And today, this morn­ing, out came the fig­ures. The econ­omy has shrunk by 0.5 percent.

“Now, there are lots of excuses. They’re even blam­ing the weather. The real­ity is if you do this you’re tak­ing a huge gam­ble with the strength of your econ­omy. And you now have a clear divide between the Repub­li­cans and the Democ­rats. Pres­i­dent Obama is say­ing freeze, invest, grow. Repub­li­cans are say­ing slash, don’t invest, grow. One will win.”

No won­der the rest of the CNN panel looked con­fused — Mor­gan was offer­ing an accu­rate assess­ment.

Prime Min­is­ter David Cameron’s coali­tion gov­ern­ment received a sharp polit­i­cal jolt on Tues­day with the release of offi­cial fig­ures show­ing that Britain’s econ­omy con­tracted slightly in the last three months of 2010, prompt­ing some econ­o­mists to warn that the coun­try was at increased risk of a “dou­ble dip” reces­sion after four con­sec­u­tive quar­ters of mod­est growth.

While the eco­nomic fig­ures are sub­ject to revi­sion, the 0.5 per­cent shrink­age fell well short of the 0.5 per­cent growth many econ­o­mists had pre­dicted. And the wider mes­sage seemed clear: The slow­down placed the Cameron government’s $128 bil­lion, four-​​year pro­gram of spend­ing cuts and tax increases — poli­cies on which it has staked its sur­vival — at sharply height­ened polit­i­cal risk.

The net effect of the new fig­ures was to blunt the government’s momen­tum and to recast — at least until eco­nomic growth resumes — the role Britain has played in the global debate about the best way back to prosperity.

Remem­ber, just this week, Sen. Jeff Ses­sions ® of Alabama said it’s imper­a­tive that Pres­i­dent Obama fol­low the lead set by our friends across the pond: “We need a [U.S.] bud­get with a bold vision — like [the one] unveiled in Britain.”

You mean the one that helped bring the British econ­omy to a screech­ing halt, senator?

So what aren’t we doing? Ygle­sias:

This is an absurd sit­u­a­tion to be in. Does any­one seri­ously deny that there’s some­thing these peo­ple could be doing that would be more use­ful than being unem­ployed? Now ask your­self this. Sup­pose you had more money. Would you buy more goods and ser­vices? I would. And if more peo­ple were buy­ing more goods and ser­vices, then wouldn’t firms need to hire more peo­ple to pro­vide those goods and ser­vices? I don’t see any way around it. So why not put some money into people’s hands so they can go out and buy more goods and ser­vices? Maybe you think we can’t do that because “the money has to come from some­where.” But it doesn’t. It’s fiat cur­rency, we can just make more. It’s true that if we print more and more money that at some point we’ll soak up all the idle peo­ple and it’ll start to spark infla­tion. And that would be an excel­lent time to stop try­ing doing it. But what’s stop­ping us today?

Ezra Klein says the administration’s moved past unem­ploy­ment as an issue because there’s noth­ing more they can get out of con­gress. Do they know there are other macro­eco­nomic sta­bi­liza­tion tools at the government’s dis­posal? Do they think it’s a prob­lem that those tools aren’t being used?

Sigh. Any­way, here’s a way to save the fed­eral bud­get with­out mak­ing domes­tic spend­ing suffer: