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What's particularly chilling is that the elite and popular policy debates are moving in the same direction. The professional economists, international financial agency types, etc are pushing for retrenchment. They seem to have won the argument at the G20 meeting. And at the same time, Republicans are pushing the argument that the stimulus spending which probably forestalled a Depression actually didn't do anything or even caused the problem. And the public seems open enough to that interpretation of events that Democrats have written off any new stimulus spending because they're scared off by the mid-term election. And because the Democrats have, Obama has.
None of this is anything that Krugman and Yglesias and a million other people haven't been saying for months. And hopefully everybody making this argument is wrong and the economic recovery is more robust than they think; it's certainly possible. But the economic and political repercussions seem both vast and perverse -- perverse because the people pushing the policies that could kill the economy seem most likely to gain from the damage politically.
It all has the look of watching a car head off the edge of a cliff in slow motion.