Government Cuts Threaten Growth

The push in Washington to chip away at the massive deficit will undoubtedly have some negative short-term consequences for the economy.  While many economists agree that the growing deficit is the biggest long-term threat to the nation’s economic health, many also believe the recovery remains too weak to impose massive spending cuts or tax increases.  Certainly, massive spending cuts will most likely lead to widespread job cutting within the government.  And, without a budget agreement in place soon, we could soon have unpaid furloughs for workers throughout all agencies.  “It is easy for critics to paint big government as this faceless organization, but the reality is that governments employ millions of people across the country; people who drive our economy by spending money on groceries, clothing, consumer electronics and vacations.  Ironically, the spending cuts that have been proposed by both parties and at all levels of government will hardly make a dent in the federal, state and local deficits, but they will make significant dents in the ability of their workers and former workers to spend money, pay their bills and otherwise contribute to the economy,” said Challenger.  Is there any way for governments to spur growth without further increasing the deficit?  How many job cuts did government agencies announce in 2010 and will that increase in 2011?   

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