Boehner, Cantor & Associates' understanding of basic economic realities is unreliable and incomprehensible for that level of leadership. They should simply acknowledge that without employment there is no spending and there are no sources of Treasury revenue; and without revenue sources, there is no deficit reduction. If they persist on professing that deficit myth: that deficits matter for the US economy, they will make matters worse. They should recognize their own shortage of viable solutions, and grasp the moment to support fiscal spending programs. As for Rating Agency downgrades, they don't matter at this moment. Recently, they have been shrugged off by all sovereign levels.I agree entirely. I would also add that what the GOP needs to understand is that if the US federal government tries to sharply reduce spending to reduce its fiscal deficit, it will most likely run massive deficits anyway. In other words, the GOP's plan to cut spending is just self-defeating.
Unless the US economy is activated, and this won't happen as a result of Federal Reserve monetary policy, the global economy will remain in a state of stagnation for a long time. It is obvious that any solution must come out of Washington. (my emphasis)
Now, it's obvious that this is bad economics. However, I would argue that this is also very bad politics. How can the GOP believe that its strategy will prove politically beneficial? Surely, at some point the American public will start to realize that the GOP's preferred approach to the economy will have been completely ineffectual. With employment levels poised to stay the same for several more years, the GOP should see that there is little, if any, currency in continuing to propagate such ideas.