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“There’s the fear such synchronized austerity across countries in Europe, along with Japan, and China may bring the world recovery to a screeching halt,” he said, adding that he is no longer as optimistic that the U.S. economic recovery will continue on its own.

Still, it is difficult to imagine what else the U.S. government could do to foster growth in an area like housing, he said, which already receives extensive government support, including the backing of the U.S. government on nearly every loan written to buy houses today.

“Is the economic medicine working? Yes, but it can only go so far,” he said. “If the lowest mortgage rates in history and plunging residential real estate prices are not enough to get even Americans who are working to go out and buy, what will?”

Republican economists say that more stimulus spending is not the answer.

They say small businesses, which ordinarily do the most hiring in the U.S., have been spooked by the heavy-handed regulatory programs that President Obama and the Democrat-led Congress are enacting and/or considering, and are holding off hiring because of that.

“Its natural that employers are afraid to hire since their taxes will go up on January 1, 2011; their energy bills will rise if Congress passes President Obama’s requested cap-and-trade legislation; their ability to borrow will decline if the financial regulation bill is signed into law; and, if they have a work force of more than 50, they will face a $2,000 penalty per worker if they don’t provide the right kind of health insurance,” said Diana Furchtgott-Roth, senior fellow at the Hudson Institute and former chief economist at the U.S. Labor Department.

She said Congress should consider “lower taxes, lower spending, and less regulatory red tape” to stimulate the economy.

“Prior efforts to stimulate with deficit spending, absurdly low interest rates, and a series of government programs designed to support the housing and automobile markets have failed to create any meaningful forward momentum,” said Peter Schiff, president of Euro Pacific Capital and a Republican primary candidate for Connecticut’s 2010 U.S. Senate seat.

If Congress takes the current economic weakness as a cue to simply spend more, it could lose the confidence of investors in U.S. debt, he said. The economy’s problems grew out of too much spending and debt in the first place, he said.

“Any new stimuli, in the form of greater deficit spending … should be considered economic sedatives rather than stimulants,” he said.