Most economic forecasters predict the spending cuts the federal government has enacted this year will slow economic growth. A few insist the opposite, that sequestration won’t hurt the economy much on balance and may already be sowing the seeds of faster growth next year.
Those economists don’t deny that the sequester will throw some workers out of a job and reduce others’ take-home pay, hurting the economy. They simply argue that the pain will be overwhelmed eventually by an accelerated flow of investment from business executives as they grow more confident that their taxes will not rise to pay down federal debt.
This is the thinking, known in Washington as “cut and grow,” that Republicans have cited since 2010 to support their push for federal spending cuts. At times, party leaders have seemed to back away from it, warning that defense cuts could devastate the economy, for example. But the theory continues to carry large sway among conservative voters who cheered the sequester cuts and urged GOP leaders to allow them to start taking effect earlier this month.