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AP: Spending Cuts Pose Threat To Economy

From the shameless propagandists at the Associated Press:

Deep spending cuts pose a new threat to US economy

November 18, 2011

WASHINGTON (AP) — Just as the U.S. economy is making progress despite Europe’s turmoil, here come two new threats.

A congressional panel is supposed to agree by Thanksgiving on a deficit-reduction package of at least $1.2 trillion. If it fails, federal spending would automatically be cut by that amount starting in 2013.

Congress may also let emergency unemployment aid and a Social Security tax cut expire at year’s end.

Either outcome could slow growth and spook markets

Does propaganda get any more obvious than this?

But now we know why we have gotten that recent spate of articles claiming that the economy has rebounded. So that the AP and the rest of the Democrat Media Complex could wring their hands about putting it all at risk with draconian spending cuts.

(By the way, the media should pick a story and stick to it. On even days we’re told these cuts will be deep and drastic. But on odd days, when they are talking about the cuts to defense, we are told that nobody will even notice them.)

Economists say a [supercommittee] stalemate makes it harder for Congress to extend the Social Security tax cut and unemployment benefits. On the other hand, if the supercommittee does forge a deal, it might include an extension of those benefits. Or it could at least clear the way for an extension later.

In other words, unless the supercommittee extends the Social Security tax cuts and extends unemployment benefits for the tenth time and beyond 99 weeks, the economy will collapse.

And never mind that the Social Security tax is the only source of funding for Social Security. And never mind that employers are being forced to pay ever higher employer taxes because of extending unemployment benefits. Which means they will hire fewer people.

Having Social Security go even more into the red and having fewer people actually working is the best way to grow the economy, according to the AP – and co-incidentally Nancy Pelosi and the rest of the Democrat Party.

The Social Security tax cut gave most Americans an extra $1,000 to $2,000 this year. Unemployment benefits provide about $300 a week. Most of that money quickly and directly boosts consumer spending, which drives the economy.

Perhaps we should do away with the FICA taxes and extend unemployment benefits forever. Since they are the real catalysts of the economy. They must be what made our country grow over the last two hundred fifty years.

By contrast, an expiration of those benefits could cut growth by about three-quarters of a percentage point, economists say.

So the AP is talking about three quarters of a percentage point? It doesn’t matter. They got the headline they wanted. They know most people won’t read past that and their first couple of paragraphs.

The lie has been successfully transmitted.

Throw in other cuts, like those passed in the August debt deal, and all told, federal budget policies could subtract 1.7 percentage points from growth in 2012, according to JPMorgan Chase and Moody’s Analytics.

And we believe them, too. (Besides, where the quotes from these "Analytics’?) 

Given the tepid economy, such a hit could be damaging.

"It would be very difficult for an economy that’s doing well to digest, let alone one that’s barely growing at potential," said Ryan Sweet, an economist at Moody’s. "That could unwind a lot of the improvement we’ve seen so far."

This is the only evidence the AP produces for their claims? This vague quote?

Moody’s? Isn’t that the same outfit that says we need to cut spending by trillions more or face a downgrade of our credit rating?

The economy grew at an annual rate of 2.5 percent in the July-September quarter. Some analysts fear it could fall below 2 percent next year, especially if the emergency unemployment benefits and Social Security tax cuts aren’t renewed

We suspect that "some analysts" might say that doing away with unemployment benefits would help the economy. You can probably find an analyst to say anything.

Or you could just make them up, as the AP is wont to do.

Another wild card: Some investors fear that the supercommittee’s failure would spark fresh downgrades of U.S. debt. Standard & Poor’s downgraded the government’s long-term debt in August. That contributed to a stock market plunge. It’s possible that a deadlocked supercommittee would lead the two other major rating agencies — Fitch and Moody’s — to follow suit

What utter mendacity, even for the AP. Fitch and Moody’s have threatened to downgrade our credit rating like Standard and Poor’s did precisely because Congress has refused to cut spending.

But the AP is trying to make it sound that cutting spending would cause the US credit rating to be lowered.

In the past month, the economy has shown surprising strength. Reports this week showed that manufacturers are producing more goods and consumers are spending more. The number of people seeking unemployment benefits for the first time is at a seven-month low

This so-called "surprising strength" is based on numbers like the GDP and unemployment rates, which are subject to being revised. And they are almost always revised for the worse, once their propaganda value has been exploited.

Sweet thinks there’s a good chance Congress will end up extending the Social Security tax cut. Partly on that assumption, Moody’s foresees 2.6 percent growth next year

Again, this entire article hinges on what one analyst at Moody’s thinks. And it isn’t even clear exactly what he was saying.

And some economists say the automatic spending cuts could actually boost confidence a bit: They would reassure the world that the U.S. government can make progress in shrinking its deficit.

The AP lets a little truth slip out, in the final paragraphs of their long agit prop fantasy.

Even so, the supercommittee seems likely to fall short of its goal to help reduce the federal debt load.

And there’s more pressure to come.

Priya Misra, an analyst at Bank of America Merrill Lynch, estimates that Congress will need to find $2 trillion more in cuts by August 2013 to prevent another credit downgrade.

And  the last paragraph basically undercuts everything that has gone before. But that doesn’t matter. The AP knows that very few people read to the bottom of an article.

In fact, they count on it.

This article was posted by Steve on Friday, November 18th, 2011. Comments are currently closed.

8 Responses to “AP: Spending Cuts Pose Threat To Economy”

  1. GetBackJack says:

    Taking money out of the Government’s hands and leaving in the private sector is going to ruin the economy.

    Maybe there is something to the magnetic pole-flip theory. Because that is just as inverted, upside down, inside out, flat out wrong and stupid as you can get.

    • Rusty Shackleford says:

      Just as with the magnetic pole flip-flop theory, that during the flip, there is no discernible magnetic pole for approximately 100 years, there is currently no discernible mental activity on the part of politicians. However it is more fluid and less identifiable in that it could last a few years or forever. I’m betting on the latter.

  2. Rusty Shackleford says:

    At the very base of the problem is that the government has far too much involvement in the economy already. It has for many years and it’s always been wrong.

    Looking at cars, I see a fairly good example. People like to tell me that the government is what got us cars that got great gas mileage and safety features. I disagree saying that the reason gas economy became an issue is because government failed to protect our ability to have cheap gasoline prices in the first place and people opted to buy foreign cars that got great mileage.

    Air bags? Give me a break. The only thing aribags have done is make cars more expensive. The number of traffic fatalities in this nation has remained unchanged or gone up since airbags were forced on manufacturers some years ago. Why is that? I thought airbags were the panacea to all our driving accident woes. I thought, “no one would ever die in a car crash again”.

    If people understood and let the free market choose what is better/best for the consumer, the people would buy that which they considered to be the most safe. And oh….the whole mileage thing? It’s another shell game. In the 70’s, GM produced about 6 or seven different types of vehicles. Now that number is closer to ten or twelve because of CAFE standards where their average fleet mileage has to be X. By spreading the margins, they can still produce vehicles that get crappy mileage, so long as what’s on the other end gets great mileage. Doesn’t matter how many of the rollerskates they sell because they can sell a lot more of the rolling living rooms to make up the loss.

    All because of government regulation.

    • sticks says:

      A good example of a market that is still relativaly free is the computer and electronic device market. When something new comes out it can be pricy, but just wait a while and due to intense compitition prices will come down. Ah the wonders of a free market! Don’t worry, soon our government will find more and more ways to regulate it for our “safety” and that will be the end of that.

  3. tranquil.night says:

    The Make Believe Media has entered a new stratosphere of repulsion lately.

    The Tea Party Debt Commisssion Budget Cut Proposal: http://www.freedomworks.org/the-tea-party-budget

    – Repeals ObamaCare in toto.
    – Eliminates four Cabinet agencies — Energy, Education, Commerce, and HUD — and reduces or privatizes many others, including EPA, TSA, Fannie Mae, and Freddie Mac.
    – Ends farm subsidies, government student loans, and foreign aid to countries that don’t support us— luxuries we can no longer afford.
    – Saves Social Security and greatly improves future benefits by shifting ownership and control fromgovernment to individuals, through new SMART Accounts.
    – Gives Medicare seniors the right to opt into the Congressional health care plans.
    – Suspends pension contributions and COLAs for Members of Congress, whenever the budget is indeficit.

    All that which has been excessively popular with the grassroots, most of it probably a political pipe dream at the moment. Still these ideas should be what the Republicans are seeking to persuade the public to support instead of always allowing themselves to get boxed into the false premises of the Establishment Media until they’re forced to cave. Instead I bet we see Establishment Republicans instantly dismiss these proposals as unrealistic and unhelpful without even weighing their merits.

  4. proreason says:

    Wouldn’t the economy “skyrocket” if everybody was given unemployment? The multiplier is like through the roof.

    I think we would all be like driving mercedes or even expensive american cars that break down really fast and taking vacations like the obamas and stuff.

  5. BannedbytheTaliban says:

    “benefits for the first time is at a seven-month low”

    What an odd way of saying that. Still, 380,000 people, which will soon be revised up, seeking unemployment benefits is hardly good news.

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