The United Kingdom got a sobering bit of news yesterday when it was announced that GDP fell 0.5 percent in the last quarter, raising the specter of a double-dip recession. Growth in the U.K. was flat in October and November before falling in December (which U.K. officials blame on that month’s cold weather).

In response to the economic weakness of the last few years, the U.K.’s coalition government, led by Conservative Prime Minister David Cameron, has embarked on a series of spending cuts, and the opposition Labor Party seized on the contracting economy to question the wisdom of slashing spending at a time when the economy is still clearly weak. The coalition is so concerned with rebutting this narrative that it dispatched Liberal Democratic Deputy Prime Minister Nick Clegg to quell fears, but even Clegg admitted that the U.K. economic plan has had a “chilling psychological effect” on growth.

Meanwhile, back here in the U.S., House Republicans are spreading the theory that cuts in government spending will lead to economic growth and job creation. In fact, House Majority Leader Eric Cantor (R-VA) has called the GOP’s strategy that of a “cut and grow majority.” At Capital Gains and Games, Stan Collender explains how the U.K.’s experience complicates the GOP’s tale:

Over the past few weeks, House Majority Leader Eric Cantor (R-VA) has repeatedly said that Republicans believe that economic activity and jobs will be created with spending cuts. The U.K. experience now belies that claim and provides Democrats with a strong talking point in response: We want the U.S. economy to grow and the failure of the U.K. austerity program shows that what the GOP wants to do in the U.S. will cause the U.S. to fall back into a recession.

Meanwhile, the Recovery Act passed by Congress here in the U.S. boosted GDP in 2010 by between 1.5 and 4.1 percent, according to the Congressional Budget Office, while economists predict that U.S. GDP grew at 3.5 percent last quarter. Of course, the U.K. numbers are early, and there’s no telling where later revisions may take them, but its worth pausing for a moment to consider the contrast between the two nations’ fiscal responses and growth numbers.

The GOP would likely blame the U.K.’s tax increases — adopted as part of its austerity plan — for the GDP fall. However, most of them don’t come into effect until sometime in 2011. As James Meadway, Senior Economist at the New Economics Foundation, wrote regarding Cameron and co.’s cuts, “it’s a marvellous story. Our brave young prince sends the big bad ogre of state spending packing. The magic free market fairy waves her wand. Jobs, growth and the good times return. We all live happily ever after. Alas, reality is starting to look less appealing.”

When the Obama administration first decided it would rescue the U.S. automakers General Motors and Chrysler, Republicans exploded with warnings that such a move would be an inevitable failure, if not the beginning of the end of capitalism. Here are some examples:

SEN. JOHN MCCAIN (R-AZ): “We should have let them go into bankruptcy, emerge and become viable corporations again. The unions didn’t want to have their very generous contracts renegotiated, so we put $80 billion into both General Motors and Chrysler, and anybody believes that Chrysler is going to survive, I’d like to meet them.” [11/19/2009]

SEN. JIM DEMINT (R-SC): “The government has forced taxpayers to buy these failing companies without any plausible plan for profitability.” [06/01/2009]

REP. PAUL BROUN (R-GA): “This is an unprecedented takeover from the private sector by this administration…It is totally unconstitutional, it’s totally against freedom, it’s totally unprecedented, and it’s exactly the same thing that Hugo Chávez is doing down in Venezuela.” [06/09/2009]

REP. TRENT FRANKS (R-AZ): When Washington gets involved in a company, “the disaster that follows is predictable.” [07/22/2009]

REP. LAMAR SMITH (R-TX): The government-led bankruptcy reorganizations of the companies “have been the leading edge of the Obama administration’s war on capitalism.” [7/22/2009]

REP. MICHELE BACHMANN (R-MN): “I’m very concerned again about these motor takeovers from the federal government…We have a gangster government when the federal government has set up a new cartel and private businesses now have to go begging with their hand out.” [06/09/2009]

Aside from the obvious continued existence of capitalism, reality has revealed a very different tale, as The Hill outlined today:

The smallest of the Big Three U.S. automakers appears poised for a comeback less than two years after the government saved it from extinction. Chrysler made a $569 million net profit last year and has $10 billion in hand. It is adding jobs in the U.S. and slowly countering impressions in Washington and elsewhere that it can’t survive. “Over the course of the last 12 months, we’ve raised our outlook significantly,” said George Magliano, senior auto analyst for IHS Global Insight. “Their whole tone has changed over the last six to eight months.”

Of course, Republicans made similar claims about the rescue of GM, saying that it was the “road to socialism.” According to the Center for Automotive Research, “if the government had not invested in the automotive industry, up to 80,000 automotive jobs would have been lost…Once Chrysler and GM emerged from their ‘orderly’ bankruptcies, the growth of automotive sector employment has been strong, with 52,900 workers added since July 2009. Had GM and Chrysler not successfully emerged, those jobs would have been permanently lost.”

ThinkProgress intern Kevin Donohoe contributed research to this post.

Today, the Financial Crisis Inquiry Commission — which was charged with examining the causes of the 2008 financial meltdown — released its final report. The Commission laid out all the excruciatingly painful details of a financial system marred by poor incentives and excessive risk, while explaining all the ignored warnings, regulators asleep at the wheel, and predatory loans which fed into a pipeline of shadowy investments that imploded the balance sheets of the country’s biggest banks. The ultimate message of the report is “this financial crisis was avoidable.”

Of the many things that contributed to the crisis, the Commission noted that derivatives — the financial instruments that brought down, among others, American International Group — “were at the center of the storm“:

The enactment of legislation in 2000 to ban the regulation by both the federal and state governments of over-the-counter (OTC) derivatives was a key turning point in the march toward the financial crisis…One type of derivative — credit default swaps (CDS) — fueled the mortgage securitization pipeline. [...]

Second, CDS were essential to the creation of synthetic CDOs. These synthetic CDOs were merely bets on the performance of real mortgage-related securities. They amplified the losses from the collapse of the housing bubble by allowing multiple bets on the same securities and helped spread them throughout the financial system. Goldman Sachs alone packaged and sold $73 billion in synthetic CDOs from July 1, 2004 to May 31, 207.

“The existence of millions of derivatives contracts of all types between systemically important financial institutions — unseen and unknown in this unregulated market — added to uncertainty and escalated panic, helping to precipitate government assistance to those institutions,” the Commission found.

Fortunately, the Dodd-Frank financial regulatory reform law passed last year included a significant upgrade in the regulation of derivatives. In fact, the derivatives title is one of the strongest parts of the law.

However, House Republicans have taken it upon themselves to undermine derivatives reform by both refusing to fund the agency charged with implementing the new rules, the Commodity Futures Trading Commission, and trying to publicly shame the CFTC into slowing down its efforts. Bloomberg reported today that House Agricultural Committee Chairman Frank Lucas (R-OK) and Rep. Michael Conway (R-TX) are accusing the CFTC of “‘prioritizing speed’ and creating an ‘irrational sequence’ of rules” as it attempts to rein in the derivatives market.

The derivatives market was essentially the Wild West of the financial world before the financial crisis: unregulated, unrestrained, and ultimately unsustainable. But with the effects of the financial meltdown and the Great Recession that followed still being felt by families across the country, the GOP is throwing up roadblocks to prevent new rules from coming online.