By Walter Alarkon - 08/30/10 04:53 PM EDT
The U.S. economy faces a “lost decade” like the one Japan suffered through in the 1990s if the government continues to spend and rack up debt, Rep. Paul Ryan (R-Wis.) said Monday.
Ryan, one of the GOP’s leading voices on the economy, said the White House and congressional Democrats have spent too much and pushed policies that have created too much uncertainty for the private sector.
Japan's government in the 1990s tried to boost its country out of recession through infusions of public works spending, but its economy grew at relatively slow rates in those years compared to the 1980s, when Japan’s economy expanded to nearly the size of the United States's economy.
China is now surpassing Japan to become the world’s second-largest economy.
Ryan said the U.S. economy would now be expanding by as much as 8 percent — a pace far faster than those of Western developed countries — if it weren't for Democratic policies.
“We should be growing at 5, 6, 7, maybe even 8 percent," he said, noting that past recoveries from deep recession have been more robust than the current one.
The annualized growth rate for the U.S. economy in the last quarter was 1.6 percent. That number was downgraded last Friday from an earlier estimate of 2.4 percent growth.
Ryan warned that the increased spending and resulting debt — now at $13.3 trillion and expected to grow by roughly $1 trillion annually for the next decade — will lead to higher taxes, deeper cuts to programs such as Medicare and more uncertainty for employers.
“The fiscal policies of our government is going in the exact opposite direction they ought to be going,” Ryan said during a conference call with reporters.
If borrowing and spending were working, Ryan said, the U.S. would not face the problems it has with its economy.
Ryan’s attacks on Democratic policies come as President Obama seeks to push back against the notion that the country is sliding back into recession. The president told NBC on Sunday that the economy is “still growing, but it's not growing as fast as it needs to.”
Obama is scheduled to give more remarks about the economy at 12:30 p.m. at the White House.