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Congress May Have Hurt the Economic Recovery

There is increasing evidence that the current economic recovery might be considerably stronger were it not for a number of congressional actions taken over the past year.

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There is increasing evidence that the current economic recovery might be considerably stronger were it not for a number of congressional actions taken over the past year. In October 2011, CAP Senior Fellow Scott Lilly authored a paper examining the impact of the fiscal year 2011 appropriation measures passed by Congress in April 2011. The analysis showed that the continuing resolution may have destroyed more than 350,000 jobs—some in government but mostly in the private sector.

Despite the strong advice of a broad spectrum of economists that the government should postpone deficit reductions until the economy was strong enough to absorb cuts without sacrificing growth, Congress did just the opposite. They slashed $45 billion from last year’s budget largely by deferring necessary expenditures—expenditures that we will be forced to make once we are in full recovery, and deficit reduction should be the order of the day.

Concern was also expressed in a number of quarters that other congressional actions taken in 2011 may have placed the recovery in jeopardy. Most prominent among these actions was the debate over raising the debt ceiling and the uncertainty that it generated, not only with respect to whether or not the federal government would pay its debts but also in terms of the rationality of the policymaking machinery itself.

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