By now, it’s been thoroughly proven by events that austerity policies backfire. Cut public spending in a deep downturn, and you only worsen the slump. Europe is the more extreme version of the proof, but even the United States, which is technically out of recession, faces a needlessly slow recovery. We’ve reduced deficits by slashing spending, raising taxes, and making sequester deals, but the supposed reward in the form of restored business confidence never arrives. Austerity, as Mark Blyth writes, neither restores growth not reduces the debt ratio, because slow growth (and in some cases negative growth) makes the debt loom that much larger.
|By: Robert Kuttner Sunday August 18, 2013 1:59 pm|
|By: David Dayen Wednesday September 19, 2012 6:00 pm|
When Mitt Romney started raising serious money for his Presidential run throughout the summer, there was one hitch. He was getting checks from a lot of big money donors that were back-loaded. The donors maxed out for the primary election and the general election, which meant half of their money couldn’t get spent until he accepted the nomination at the end of August. Suddenly, the Romney campaign faced a cash crunch for the remainder of the “primary.” They had a lot of money in their bank account, but a substantial amount of it could not be spent until a set date. So they did what any upstanding financial wizard would do – they borrowed against the money in the bank.
|By: Dean Baker Wednesday June 6, 2012 9:00 am|
David Brooks is again prominently displaying his misunderstanding of economics in the New York Times, first by claiming that borrowing today is impoverishing our future. Elementary economics shows the opposite is true.