As somewhat lower-than-expected first quarter GDP figures begin to sink in today, we’re going to hear another chorus of cries from conservatives that Obama’s economic policies have failed, and that what this economy needs is a good dose of—austerity!
No, that’s not the word they will use, of course, but claims that the “debt crisis” is America’s number one problem, or that “business confidence” needs a boost via assurances that the “debt crisis” will be addressed, or that government is soaking up resources that the private sector requires for long-term growth, etc. etc: that all adds up to the “A word.” And as Paul Krugman points out, we’ve already had a strong taste of it thanks to retrenchment of state and local governments over the last three years:
For the past two years most policy makers in Europe and many politicians and pundits in America have been in thrall to a destructive economic doctrine. According to this doctrine, governments should respond to a severely depressed economy not the way the textbooks say they should — by spending more to offset falling private demand — but with fiscal austerity, slashing spending in an effort to balance their budgets.
The good news is that many influential people are finally admitting that the confidence fairy was a myth. The bad news is that despite this admission there seems to be little prospect of a near-term course change either in Europe or here in America, where we never fully embraced the doctrine, but have, nonetheless, had de facto austerity in the form of huge spending and employment cuts at the state and local level.
It’s a point that needs to be raised and repeated so long as neo-Hooverism persists: austerity is its own punishment; it hasn’t boosted growth in Europe, and it won’t boost growth here. If you want smaller government as an end in itself, fine, just say so. But don’t call it an economic growth strategy, because it’s not one.
UPDATE: This Atrios quote about sums it up the campaign for austerity: “I might actually prefer evil. This is mostly just stupid.”
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