The political business cycle, on the other hand, has a somewhat different definition. The "political business cycle" refers to economic policies (fiscal policy, monetary policy) enacted by our elected officials for the purpose of political gain. These policies may have relatively quick positive impact on the economy but be destine to cause problems in the long term. Our elected officials may reason that "I will implement the policy to win the election, if I win I will reverse course and minimize the damage, if I lose it will not be my problem".
In the past this approach has been used almost exclusively to bring about a positive impact on the economy, if only for a short time. However, since the 2010 mid-term election have we witnessed the "political business cycle" in a much more sinister light?
When The Senate Republican leader, Mitch McConnell , said: “The single most important thing we want to achieve is for President Obama to be a one-term president,” how far was he and other Republicans willing to go to achieve that goal?
Conventional wisdom and experience tells us that during a recession the national debt goes up, largely due to the reduced tax revenue resulting from high unemployment and lower production and in most cases stimulus spending. Experience also shows that under these circumstances cutting government spending to offset the debt will only result in higher unemployment and an even longer recession with a much more difficult recovery resulting in even more lost tax revenue. Mit Romney himself did a great job of explaining the effects of such cuts when asked why he wouldn't emplement all of his cuts emediatly if elected:
"Well because, if you take a trillion dollars for instance, out of the first year of the federal budget, that would shrink GDP over 5%. That is by definition throwing us into recession or depression. So I’m not going to do that, of course. What you do is you make adjustments on a basis that show, in the first year, actions that over time get you to a balanced budget."
Two examples of how this works are clearly visible in Britain and Spain. Britain cut their government spending across the board and raised taxes to help lower their debt. The result, economic growth stalled and their national dept exceeded their estimates by almost 100%. Spain followed a similar course and their unemployment soared to 20% and their debt exploded.
With that in mind, the questions we should all be asking ourselves are:
Why did house republicans force, bully and even blackmail America into making budget cuts at a time when they knew it would keep unemployment high and prolong the recession?
Why did they block every bill that was designed to lower unemployment including President Obama's Jobs plan that would have created more than a million jobs?
Why have they wasted the past few months forcing over 30 re-votes on the Health care bill continuing to do so even after it was upheld by the supreme court, shouldn't that time have been used to find a solution to the upcoming mandatory cuts that will result in yet another recession? Would finding a solution to that problem help remove some of the uncertainty that is preventing the private sector from hiring at a greater rate, is that the goal?
Who benefits from a weak economy and high unemployment?
Has our economy been sabotaged for the purpose of a political victory?
These are just a few of the questions that we should be asking, after we have asked and honestly answered these questions we should then ask ourselves what we can do to bring an end to the problem.
See also: Did Republicans deliberately crash the US economy? The Guardian
Our Clinton Nightmare: factcheck.org
