William Cohan, Bloomberg View columnist and author of “Money and Power: How Goldman Sachs Came to Rule the World,” and Catherine Rampell, economics reporter for The New York Times, join “Viewpoint” host Eliot Spitzer to discuss how the economy is affected by a decrease in government employment and government spending.
Cohan stresses that Congress needs to take action on the looming fiscal cliff crisis: “Some movement towards some government spending, stability, resolution, answers — looking like the Congress is actually working together to solve the problem — I think will go a long way.”
Rampell uses the example of a laid-off teacher who limits spending due to unexpectedly tenuous finances to explain how the shrinking public sector impacts the economy based on the “multiplier effect”: “The businesses that I would have patronized then don’t have the same amount of orders coming in, and so they, in turn, might lay off workers or at least freeze their hiring because they’re a little bit concerned about what might go on next.”
