In a preview of the attack lines we'll be hearing this fall, two key conservative fiscal experts teed off on the Democrats' economic policies on Monday. "We are basically replicating the kinds of economics that the Japanese practiced in the 1990s, and we are buying ourselves our own lost decade," Rep. Paul Ryan of Wisconsin, the top Republican on the House Budget Committee told reporters in a conference call. "It's very very clear that the economic policies of the Obama administration and this Congress are failing miserably."
The threat of expiring tax cuts looms over small-business hiring and investment, Ryan said. And in case anyone was thinking about another round of stimulus spending, Ryan is ready to bash it as a "Keynesian experiment" and that the cost to small businesses in market uncertainty is too high.
"There is nothing about Keynesian stimulus that can fix" the economy, said Douglas Holtz-Eakin, a former head of the Congressional Budget Office who was Ryan's partner on the call.
What about that CBO report saying that the stimulus has boosted GDP and headed off worse unemployment? "It's important to recognize that those estimates are based on a computer model," Holtz-Eakin said. Running a model that shows the stimulus works only proves that you have a model designed to show that the stimulus works, he said. "Take all these model-based exercises with a grain of salt."
The Democrats appear to have already received the stimulus message. In an interview with NBC over the weekend, President Obama was asked about his economic plans. He offered up a small-bore small-business tax credit bill that the Senate will take up in September, along with clean energy and infrastructure projects. (At the White House today, Obama said he would soon offer more detailed plans.)
Democrats have been hoping that increased popularity of the new health care law and a recovering economy would carry them into the midterm elections, but so far those hopes have not been borne out by polls and economic data.
Asked about his work on Obama's fiscal commission, Ryan declined to offer specifics. But as Republiicans eye a House majority after the elections, he offered a sort of rebuttal to the Democratic argument that a GOP-controlled Congress would take the country back to the Bush administration's economic policies. Asked how he differed from Bush, Ryan cited spending."We did too much of it," he said, and criticized Democrats for following in Bush's path.
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