As you might have already seen, the latest Gross Domestic Product report showed the nation's economy shrunk by 0.1 percent in the fourth quarter of 2012, the worst economic performance since 2009. This is not a good number, so naturally Republicans are thrilled:
But if they take the time to move past the mere fact that growth declined and ask themselves why growth declined, their enthusiasm might ebb. That's because the economic slump was largely caused by a dramatic reduction in federal spending:
The drop was driven by a plunge in military spending, as well as fewer exports and a steep slowdown in the buildup of inventories by businesses. Anxieties about the fiscal impasse in Washington also contributed to the slowdown. [... JP Morgan chief United States Economist Michael] Feroli said there were some hints the economy was performing slightly better than the headline number suggested.
The 22.2 percent drop in military spending – the sharpest quarterly drop in more than four decades – along with the drop in inventories and exports overwhelmed more positive indicators in the private sector, he said. For example, final sales to private domestic purchasers, which strips out government spending as well as trade and inventories, rose by 2.8 percent. “Consumers and businesses kept spending at a pretty steady pace,” Mr. Feroli said.
In fact, for the full year, the economy grew more in 2012 than it did in 2011. But the last quarter of 2012 serves as an example of what happens when the government abruptly slashes spending—and that's exactly what's scheduled starting on March 1 when the sequester starts taking effect.
Republicans have always said that dramatic spending cuts will accelerate economic growth, but last quarter's growth figure once again put the lie to that fiction. It makes it clear that if House Republicans insist on implementing the sequester, they'll be directly responsible for tanking the economy.