With one phrase, in the statement issued after its last meeting, the Federal Reserve recognized that U.S. fiscal policy is "restraining economic growth."
In other words, recent federal and state budget cuts and tax increases are having a negative effect on the economic recovery. This is the first time the central bank has expressed its opinion on what is today's most intense debate on economic policy.
So far, the alternative between austerity and stimulus has pitted Republicans and Democrats and academics close to both political persuasions.
Name-calling has also been intense. For instance, the editorial page of the Wall Street Journal almost pejoratively calls "Keynesians" those followers of the British economist John Maynard Keynes, who advocated increased public expenditure to counter the Great Depression of the 1930s.
In his bi-weekly column in the New York Times, Nobel Prize-winner Paul Krugman responds, calling "austerians" those who predicate less public expenditure and lower taxes to reactivate the economy.
However, when confronted with some of the ugly consequences of reducing federal expenditures, Keynesians and austerians can reach agreements. Recently, when air traffic started to slow down because budget cuts were causing furloughs of air traffic controllers, an immediate bipartisan agreement to solve the problem was reached in Congress and with the White House.
Isaac Cohen is an international analyst and consultant, a commentator on economic and financial issues for CNN en Espaņol TV and radio, and a former director, UNECLAC Washington Office.
It's not too late to submit your company for the 2013 HispanicBusiness 500! Just visit https://www.surveymonkey.com/s/NSYJKM7.
Check out the 2013 Top 25 Hispanic Nonprofits -- they're on a roll, despite continued hard economic times.
Most Popular Stories
- 5 Notable Hispanic Technology Executives
- Top Hispanic Tech Companies Push for the Top
- Rand Paul Tops Presidential Straw Poll at Conservative PAC Conference
- Tesla's Alt-Energy Future Aims for Massive Lithium-Ion Battery Production
- New Chat App, Yik Yak, Causes Problems for Students
- China Urges Malaysia Flight Emergency Response
- Gas Prices May Jump from Calif. Emissions Law
- Visa, MasterCard Team Up to Focus on Payment Security
- Russia, Crimea Discuss Referendum
- Obama Meets with Ukraine Prime Minister Wednesday