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Stop Pushing Austerity

April 28, 2013

The constant call, primarily by Republicans in Congress, for drastic spending  reductions in order to eliminate the federal budget deficit within ten years without further increasing tax revenues seems to have hit a snag recently. The work of Harvard economists Reinhard and Rogoff turns out to have included serious errors which cast the validity of their conclusions, used widely by those seeking to institute such austerity policies in this country in great doubt.

In order to reach these spending reductions, the policy-makers sought to deeply cut social programs and worker benefits that were helping those affected most negatively by the recession and high levels of unemployment experienced after the financial and housing bubble crashes. Similar policies have been likewise pursued in many European countries, which slashed social programs in an effort to get their debt situation under control.

The policies have been criticized both here and abroad by economists who argue that such actions will act as a  further drag on an extremely fragile economy. That may result in another recession with an even more prolonged period of high unemployment and stagnant gains (or even losses) for most workers. This has already happened in this country to a certain degree in the “recovery” after the last recession, which saw nearly all of the income gains going to the top of the economic ladder. They argue that government spending needs to be maintained at a level which will stimulate economic growth.

The President and his administration have argued for a balanced approach of spending reductions and revenue increases aimed at creating jobs and improving infrastructure. Also, new spending was proposed for programs to improve early education for all to help ensure a brighter future for all in order to go about improving the nation’s fiscal health. Republicans have stuck to their view that drastic cuts must be made in order to ensure that our debt and deficit do not create a national economic catastrophe. They further call for cuts to basic social safety net programs, such as Social Security and Medicare, which they have identified as the main cause of future deficit spending.

So far, the news of the flaws in the research used in backing up the austerity policies does not seem to have changed enough minds to alter the budget discussions going on (or not) in Washington. The sequester continues to rule the roost, including significant cuts in many programs affecting large numbers of many of the most vulnerable groups of people in this country. Long-tem unemployment, head start, cancer treatment, low-income housing and student aid are but a few areas that are already being affected by the sequester. Furloughs are affecting the incomes of many federal employees as well.

The only significant alteration to the sequester was the hasty passage of legislation last week to enable the FAA to halt furloughs that were causing flight delays at the nation’s airports. While these delays are not insignificant in their impact on our economy and the lives of travellers, they are far from being the only or even the most drastic in terms of their negative impact on the everyday lives of most of the rest of us. Steny Hoyer, Minority Whip in the House of Representatives, gave a very poignant speech to that effect as the House was preparing to vote for the FAA legislation. There are links to that speech, as well as an article that talks about other program cuts that deserve at least further discussion before they have been completed, at the end of this post. It is important to note that the FAA legislation was hastily approved so that it would not hinder yet another Congressional recess. Without the passage of any other significant legislation, we are left to await their return to the jobs we elected them to perform. Delay and obstruction seem to remain the order of the day in both houses of Congress at this juncture.

In Europe, economies of several countries remain in disarray. Despite rising and even unemployment reaching record levels in Spain and France, as well as being high in much of the rest of the Eurozone, austerity policies remain in place there. European economies continue to show the failure of those policies in terms of not improving their debt situation with respect to GDP, but also in terms of the deteriorating living conditions of those most deeply affected by the government spending cuts. Would it be wise for the United States to continue down the austerity path in light of the results of years of such practices in similar economies elsewhere in the world? Can the proponents point to a single success of austerity in improving a nation’s economy?

While Republicans remain the most vocal proponents of deficit hawk policies, they are far from being alone. Members of both parties participated in various groups, starting with Simpson-Bowles, operating under the same set of assumptions brought about by the flawed study. The President and his Administration have also appeared to buy into the central premise of deficit and debt reduction to a large degree, as illustrated by their recently released budget proposal. The budget deficit has been steadily dropping since the end of the stimulus and the winding down of the two wars. More may need to be done in this regard in order to regain the sort of equilibrium achieved briefly at the end of the Clinton administration, but that only occurred with both spending cuts and tax increases.

Reducing the deficit and debt as proposed by the Congressional Republicans over the past few years is not only unsound economic policy as stated by those economists who haven’t had their math skewered in recent days, it is also bad public policy. The sequester was designed as a potential policy so flawed that no reasonable Congress would allow it to take place. Unfortunately, no reasonable Congress seems to exist at this point. The sequester should be repealed and serious budget discussions grounded in economic reality begun immediately. Economic reality must also be tempered with consideration for the very real consequences of policy decisions and changes to the lives of ALL Americans, not just those wealthy enough to throw money at Washington politicians to ensure their interests are protected and situations improved.

Reducing the deficit without creative cost reductions that do not involve actual benefit reductions making living conditions less affordable for the most vulnerable is the path forward. Tax increases and/or reform to increase revenues cannot be off the table in order to achieve the society which most of us are striving for. A battle was recently lost regarding gun law reform in the US Senate, due largely to lobbying  by special interests and fear of retribution by those interests against office holders that don’t toe the line. That is not democracy. We must not allow that sort of government to continue to thwart the interests and well-being of the vast majority of the people living here, whether it regards, budget policy, foreign policy, immigration, guns or any other matter.

Congress needs to address all these issues and come up with viable solutions in a comprehensive, not a slapdash manner. Using faulty presumptions leads to failed policies and ruined economy opportunity for too many of us. Austerity has proven to be flawed economic policy in both theory and practice. Holding onto it here and now will not improve our economy any more than it has Europe’s. We need to look forward and use policies that actually help workers to improve their standards of living as well as enable us to provide for improved standards of living for those who cannot continue to do so on their own. We can have a better world if we stop throwing people under the bus or out in the street. We can and should provide for all of us as a society. We only need the will. Ask your Congressional Representatives if they are interested in doing what is right for all of their constituents, or primarily in keeping their jobs by making it easier for some to hoard unconscionable sums of wealth and preventing it from benefitting the society that made their accumulation of it possible.


Suggested Further Readings:

12 Programs Congress Refuses To Save From Automatic Spending Cuts

Austerity’s Failure Everywhere You Look

The 1 Percent’s Solution

Austerity Brings Unemployment to New Highs in Spain and France – So Why Do Pols Keep Pushing it in the U.S.?

Congressman Lambasts Reps Who Chose To Fund FAA Instead Of Feeding Hungry Children


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  1. John Sullivan permalink

    I read many of your posts. What about future generations? I don’t think anyone likes austerity. Balanced approach sounds reasonable to me. Country needs to make difficult decisions. Someone needs to lead and say no. You may be right about austerity. But you are dead wrong if you think things don’t need to change. Country on a path to bankruptcy.

    Liked by 1 person

    • Brett permalink

      That’s actually untrue. What this country is on its way towards is higher taxes. Given that tax rates are actually LOW (and if you care to debate that, beware – I have the data), there’s room for upward movement.


  2. Indeed John I have seen Greece and it is us.


  3. Reblogged this on Politically Activated and commented:
    via @rcooley123


  4. allen osuno permalink

    This whole austerity thing is the result of the oligarchs’ attitude toward the poor and middle class. They don’t CARE if it is detrimental to them or to the country as a whole. The GOP is impervious to facts. This austerity is ideology-driven. Facts and experience won’t support these policies, yet they push them anyway. Social Security is not even part of the Federal budget. It is self-funded and solvent, with around 1.6T dollar surplus for now.
    This whole narrative of Soc Sec and the rest of the safety net being a ‘problem’ is a BIG FAT LIE. Our government is being run by psychopaths, who hate the poor and will do anything to make them suffer. This is a fair statement,borne out by the long list of mean-spirited,unnecessary cuts.
    To add insult to injury, the super rich won’t allow any of THEIR taxes (already unusually low for an industrialized country) to be raised. This is fiscal madness and morally evil. We as a people are so sunken in ignorance and self-absorptive lifestyle that we can’t get our heads out of our posterior to even see who is causing our problems. The rich are perps that are blaming their victims and want us to die. Alan Grayson was right. The GOP’s plan for us is ‘to die, and die quickly’.


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