Fiscal Austerity Is Not Helping Our Economy

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Nearly five years after the collapse of the investment bank Lehman Brothers and financial giant AIG, the U.S. economy is still struggling to attain growth capable of ending unemployment and boosting family incomes—at least for those residing below the utmost heights of America’s income scale.

Bureau of Economic Analysis data released this week show that the growth of U.S. gross domestic product, or GDP—the sum total of goods and services produced by workers and capital in the United States—reached 1.7 percent in the second quarter of 2013, up from 1.1 percent in the first quarter. The four-quarter trend stood at a paltry 1.4 percent, down from 2.8 percent last fall, before the “fiscal cliff.” Today’s report also provided new estimates for all measurements of GDP dating back to 1929.

No one should be surprised that growth is muddling along at this anemic pace. This was the predictable outcome of the across-the-board spending cuts that have been in effect since March, as well as other mounting fiscal austerity, wrought by deficit hawks in Congress in an ongoing political struggle following the 2010 midterm elections.

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