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Is GOP trying to sabotage economy to hurt Obama?

By Charles Babington

Associated Press

Published: Saturday, May 19 2012 8:05 a.m. MDT

Schumer and other top Democrats have said for months that GOP lawmakers may be trying to strangle the economic recovery for political reasons.

"Their strategy is to suffocate the economy for the sake of what they think will be a political victory," Obama's campaign manager, Jim Messina, wrote in an email to supporters last October, when Congress was debating a jobs bill.

Senate Majority Leader Harry Reid, D-Nev., said his Republican counterpart was not cooperating on that legislation "in hopes that he can get my job, perhaps."

Maryland Gov. Martin O'Malley, chairman of the Democratic Governors Association, told The Associated Press last year that some GOP lawmakers, "through their intransigence, cleverly set up a situation for America's economy to fail, either by needlessly driving us to default, or needlessly driving us into massive public-sector layoffs."

Federal, state and local government layoffs have been under way for months. They may be necessary to reduce deficits and survive recessions. But they increase unemployment, a problem for any president seeking a second term.

Since February 2010, when the economy began consistently adding jobs, the private sector has gained 4.2 million positions. But federal, state and local governments during that time have cut more than 500,000 jobs.

House Democratic leader Nancy Pelosi of California did not ascribe partisan motives to Boehner's latest warnings about the next debt ceiling showdown. But she said he may be unnecessarily hurting the economy. "It already can be damaging, just the fact that it's brought up," Pelosi told reporters Thursday.

Republicans say it's absurd to make such an accusation. They point to bipartisan efforts to pass jobs-creation bills, trade pacts and, after some arguments, an extension of the payroll tax cut that Obama originally had proposed for only one year.

GOP lawmakers want Congress to act this year to ensure that none of the Bush-era income tax cuts will expire, as scheduled, on Jan. 1. Such assurance, they say, could lead investors and business owners to start expanding and hiring now.

Democrats say the move, by itself, would increase the deficit dramatically. They want to end the tax cuts for the wealthiest and they note that the economy boomed during Bill Clinton's presidency, before the big tax cuts of 2001 and 2003 were enacted.

Boehner's aides say the speaker supports tax law changes, including eliminating some loopholes and exemptions, that could result in greater revenue even if rates remain the same or are reduced.

As for the debt limit, "allowing America to default would be irresponsible," Boehner said Tuesday at an economic forum. "But it would be more irresponsible to raise the debt ceiling without taking dramatic steps to reduce spending and reform the budget process."

Democrats say that's precisely the type of economic saber-rattling that can frighten investors and employers, and damage Obama's re-election hopes. Boehner disagrees.

"I said that we should not wait until the 11th hour to address these issues," Boehner told reporters Thursday. "The only ones who are talking about drama or brinksmanship are my Democrat colleagues."

The danger of another credit-rating downgrade "comes from continued inaction on the deficit, and our piling debt," he said, not from "calls for action."

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