Call it a victory for Military Keynesianism theory as today’s dreadful GDP numbers seem to be a result of a drop off in military spending.

It’s always entertaining to read Robert Samuelson’s columns on Monday mornings. They are so deliciously orthogonal to reality. Today’s column, asking whether America is in decline, is another gem.

The economy has been in very poor shape the entire three and a half years President Obama has been in office and there is zero indication that it will get any better before November.

Pelosi’s statement today, like the leak of the Super Committee Democrats’ proposal yesterday, is part of an extremely depressing pattern. It is the Democratic party slowly moving from defending entitlement programs to taking the official position that Medicare and Social Security should be cut.

Now I do have to ask how many folks remember the response of Speaker of the House Boehner way back in February when it was pointed out to him that cutting jobs could hurt the economy:

“So be it.”

You really should be careful of what you ask for Mr Speaker.

I have to chuckle at the lipstick that the Senate Appropriations Committee put on their pig of a budget deal for 2011.

I think there’s a notion out there, expressed on the right, that shutting down a bunch of government functions that they don’t like anyway has benefits in and of itself, and furthermore it saves the government cash in the short run. But that’s actually not true.

The GDP release for the first quarter of the year, which ends on Thursday, will come out in a matter of weeks. And the same analysts who upgraded on the tax cut deal are now downgrading on this news. And that’s before the likely government shutdown on April 8, which will affect the second quarter.

The in-the-know types in Washington keep assuring the little people that there’s some secret negotiations on walking back from the budget standoff in Washington, avoiding a government shutdown. Pardon me if I don’t see it happening. It’s true that Republicans are working on a stopgap continuing resolution that would last two weeks, not four like the Democrats want, and would include $10 billion in cuts, unlike the Democratic plan which keeps things at current levels in the short-term. But that leaves the two sides $10 billion apart, with a little over a week to go. Senate Republicans plan to offer this measure as a substitute amendment to the Democrats’ stopgap, but that’s just to draw votes and rail against moderates for “voting against spending cuts.” Absolutely nothing here makes me believe that the continuing resolution won’t run out. I see a lot of posturing but no solution. And to be clear, we’re now talking about $10 billion dollars, in a budget of over $3 trillion, leading to a debilitating shutdown.

Into this environment comes something Sen. Chuck Schumer highlighted today – an analysis from Goldman Sachs showing that the House spending cut plan would significantly inhibit economic growth.

Economic growth, in theory, can solve the two most niggling problems facing the country – unemployment and a soft housing market. Growth can lead to more demand, forcing businesses to hire to keep up the supply. Paradoxically, this would lower corporate profits from 2010, where they hoarded cash. Spending that cash would increase overall growth. Similarly, growth would be the biggest cure for the housing sector. It would create more single-domicile families, prevent more foreclosures and defaults, tighten supply and increase demand for housing. While supply is very large right now, after it gets absorbed you would even see new construction and housing starts, which feeds back on job creation. Growth, then, in this reading, is the key indicator. And everyone is predicting economic growth in 2011.

That would hold as long as we were talking about spectacular growth, and as long as the economy was not coming out of a Depression-like state. But as Paul Krugman explains, the kind of growth needed – and the current state of the economy – are not in that place right now.