What would a Ron Paul economy look like? Suzy Khimm connects the dots for the Washington Post:
Ever wonder what Ron Paul’s America would look like? Then read the budget outline that Paul released as part of his 2012 presidential bid. It promises to cut $1 trillion during his first year in office, balance the budget by 2015, withdraw us from all foreign wars and eliminate five Cabinet-level agencies in the process. Economists across the political spectrum say the impact of such drastic government spending cuts would be majorly disruptive and harmful to the economy in the short term.
“At the scale he’s talking about, it’s unlikely you could have an immediate reduction in government without hurtling the economy into recession,” says Kevin Hassett, economic policy director for the American Enterprise Institute and chief economic adviser to John McCain’s 2000 presidential campaign. Hassett maintains that Paul’s plan for a limited government “would be really positive” in the long run. But he also believes that there would be better means to achieving that end. “I think that you could achieve his long-run objectives with less short-run disruptions,” he concludes.
By reducing the deficit from more than $1 trillion to $300 billion in just a year, Paul’s plan would upend the economy at a time when it’s already fragile, says Gus Faucher, director of macroeconomics for Moody’s Analytics. “That much deficit reduction in one year is going to be a huge drag on the economy . . . the reduction in spending is much greater than cuts in taxes,” says Faucher. “We’re seeing that impact in Europe right now, where severe fiscal austerity has caused big problems for the European economy.” While long-term deficit reduction is important, legislators need to make sure that the economy is strong before major cuts take effect, he adds, calling Paul’s plan “much more ambitious” than other Republican proposals to date…
[continues in the Washington Post]