SPENDING CUTS WILL HURT ECONOMY

http://www.nytimes.com/2011/04/12/business/economy/12econ.html April 2011

"The proposed federal spending cuts, which were decided late Friday, do not amount to much by themselves, about 0.25 percent of annual domestic activity. But they join a growing list of minor problems impeding growth, economists said, including higher fuel prices and bad weather, Europe’s creeping malaise and the effect of the Japanese earthquake.
The impact of those problems, combined with growing cuts in spending by federal, state and local governments, has led some experts who had forecast that the economy would expand by more than 4 percent in 2011 to retreat toward a 3 percent growth rate. And it raises the question of how many more small cuts the president can afford.
Diane Swonk, chief economist at Mesirow Financial, a Chicago investment firm, said she had cut her forecast for 2011 to 3.3 percent, from 4.2 percent. And if growth falls below 3 percent, she said, “You’re just running on a treadmill. You’re not getting anywhere.”

Recent employment numbers show the economy is not going anywhere, commercial property for lease abounds in empty spaces, where are the new businesses? CHEAP money is not attracting those who might borrow, so the FED policies are like "pulling on a string".

Numbers as to the SIZE of proposed cuts in govt spending have been anywhere from $1 trillion to as much as $4 Trilion over 10 years. ANY CUTS come right out of economy, many companies opening offices in DC just to be close to all that spending potential.

Of course the argument is the Govt is inefficient in their spending, and it takes away from small business development almost dormant like the 7 year locust.

jan 2011
"Moving aggressively to make good on election promises to slash the federal budget, the House GOP today unveiled an eye-popping plan to eliminate $2.5 trillion in spending over the next 10 years. Gone would be Amtrak subsidies, fat checks to the Legal Services Corporation and National Endowment for the Arts, and some $900 million to run President Obama's healthcare reform program."

A SHOWDOWN is coming, even if some agreement is made BEFORE THE DEBT CEILING DEBT LINE, a reduction in spending will hurt economy, and the savings will not make muxh difference with $1T-$1.5T deficits each year for what seems eternity.

How much better would YOU feel if instead of owing $100,000 to a bank you owed $150,000? well at least they didn;t cut you off at $100,000. The govt will just PRINT the difference...and keep printing..leaving you and I to pass the SHORT STICK to each other.

D