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Health & Fitness

It's Still the Economy Stupid (Part 3)

Elections May Remove Political Roadblocks on the Route to Economic Recovery.

Recent elections in Greece and France demonstrate that democracy may be the counterweight to the economic austerity doctrine espoused by the elite in many European countries and by many GOP candidates, congressmen and governors. Drastic cuts in social spending have stifled economic growth as economies of certain European countries, notably Great Britain, have slipped back into recession. Similarly, states which elected Republican governors and legislators with "Tea Party" backing in the 2010 elections have stifled local economies by massive layoffs of public employees inflating the unemployment numbers or by discontinuance of public works projects needed to stimulate the economy. 

Voters in other countries have begun to register their discontent by voting out governments who put in place austerity budgets which refused to stimulate their economies with increased public spending but rather cut public spending in the hope that confidence in the economy will be restored and the markets would reward austerity with increased economic activity. Noble Laureate economist Paul Krugman refers to this irrational belief in free market magic as "the confidence fairy". 

In our country the next election may well be a referendum on the economy as well, but with a twist. Here it is President Obama and the congressional Democrats who are the embattled incumbents. Mitt Romney and the congressional Republicans best hope for victory has been to try to block all measures to stimulate the economy and to try to pin all negative economic news on the President and his "failed policies" in the hope that the public mood turns sour enough to return the GOP to power. 

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As Krugman points out, however, this strategy depends on the voters having a short attention span and an even shorter memory. The polices espoused by Romney, low taxation of the wealthy and de-regulation, are the very policies that landed us here during the Bush Administration, resulting in stagnant growth and spiralling deficits. 

Although Krugman has been critical of the Obama Administration for not doing enough to stimulate the economy in 2008 and for not having a second stimulus in 2009, when the recession proved deeper than anticipated, he generally discredits the attacks on the President's policies that seeks a balanced approached of cuts and taxation and debunks the alternatives offered by Romney and his budget guru, Congressman Paul Ryan, which would keep in place tax breaks for the wealthy and slash social spending.

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With both sides spoiling for a fight over the economy it will be the voting public which decides the course of our country for the next four years. In the meantime expect billionaires to continue to pour money into political ads and front groups to perpetuate the system which has concentrated power in the few at the expense of the many.

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