Not very well so far. Britain, which had been in the midst of a decent recovery, saw retail sales drop 6 percent in March. Of course, one month doesn't mean the argument is won, but the problem is that the vast majority of economists knew this would be the result.
Republicans are essentially making the same arguments about what the United States should do. Bring down our deficit now, they say, and financial markets will gain more confidence in our economy, and set interest rates low enough to lead to long-term growth.
Now, there are a few things to say here, all of which should be blindingly obvious but apparently aren't:
- Interest rates are historically low right now. Even in our current state the world has a lot of confidence in the U.S. economy.
- The thing we could do to end this confidence right away is to do something unbelievably stupid like, say, not raising the debt ceiling. That's just what the GOP is threatening to do.
- When a recession is caused by a lack of consumer demand for products, the government steps in to bridge the gap until the economy starts recovering. It's the same formula that's worked time and again since the Great Depression.
Like I said, what's happened in Britain so far doesn't absolutely prove my point. But, where is the logic on the other side? Where is the evidence that the policies Republican leaders are pushing for have ever worked? The argument isn't being driven by evidence, though, it comes from ideology.