Austerity Will Make It Worse

I was talking to a friend of mine the other day about the $85 billion in spending cuts that will kick in as a result of the sequester, and he said, "Mike, you're being too negative, these are just scare tactics."

Scare tactics, perhaps. Too negative, maybe, but that $85 billion is only the tip of the iceberg. Actually, it will be more like $130 billion when the normal multipliers are applied -- most economists, including those at the Congressional Budget Office and the Office of Management and Budget, use a multiplier of 1.5. That means that for every dollar of spending that the government cuts, someone in the private sector will reduce spending by an additional $0.50....527 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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