Congress Could Let Recovery Crumble

[Purveyor]

By Clive Crook, Published: April 3 2011 20:31

The US economy showed new vitality in March, according to employment figures released last week. The unemployment rate fell to 8.8 per cent, reflecting a broadly based increase in private sector jobs. It was good news, and Wall Street was pleased. But do not celebrate the beginning of a self-sustaining expansion just yet.

Businesses have reached the point where further increases in output require them to take on workers. The question is whether demand and output will keep strengthening or subside. Looking ahead, some of the risks – such as higher oil prices and the disruption of supply chains following the Japanese earthquake – are unavoidable. Others are self-inflicted injuries.

Monetary policy is about to move from expansionary to neutral, with the expected end of the Federal Reserve’s bond buying programme in June. Fiscal policy, properly measured, is moving abruptly from neutral to contractionary. To make matters worse, Republicans in Congress are playing an outrageous game of brinkmanship over the budget for the current fiscal year.

Some Tea Party supporters happily contemplate a shutdown of government at the end of this week, when the authority for federal spending expires, or some time next month, when public borrowing will hit the statutory debt ceiling. A shutdown would strengthen their hand in rolling back government, they think, and teach the White House a lesson. Some Democrats hope it will happen, calculating (correctly) that the tactic will explode in the GOP’s face.

MORE...

http://www.ft.com/cms/s/0/caed28e4-5e22-11e0-b1d8-00144feab49a.html

[msongs]

1. repubs are praying for it to crumble so they can bully the dems into caving even more. nt

[Donnachaidh]

2. could? They are actively pushing the economy into the toilet

They seem to think once they've done that - all of it can be blamed on the Dems.

[yourout]

3. Crumble?....the are putting a knife in it. They know any chance of them taking the White House....

depends on a shitty economy.

[toddwv]

4. Oh, you can bet that they aren't done yet.

The American People haven't felt enough economic pain to the point where they will willingly accept $2.00 an hour with no benefits.

THAT is the true endgame here and were not completely over the edge but were once again teetering.

The Republicans will do whatever they can to sabotage recovery until after 2012.