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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsKrugman: Unprecedented Austerity (unprecedented since post-WWII demolisation)
As many people have noted, a strange thing has happened on the fiscal policy front. Intellectually, the case for austerity has pretty much collapsed, having been reduced at this point to the Three Stooges Theory: were supposed to consider austerity a success because it feels good when you stop, or at least let up. At the same time, however, austerity policies continue to be imposed, on both sides of the Atlantic.
And amid the punditizing over the latest budget deal, its worth considering just how unprecedented US austerity has been. Look at total government spending federal, state, and local and correct it for inflation, as measured by the core personal consumption expenditures deflator (the Feds preferred measure). (It doesnt matter much which measure you use, but this one has less noise). Smooth it out by looking at three-year changes. Heres what you get:
You can see that there was a brief, modest spurt in spending associated with the Obama stimulus but it has long since been outweighed and swamped by a collapse in spending without precedent in the past half century. Taking it further back is tricky given data non-comparability, but as far as I can tell the recent austerity binge was bigger than the demobilization after the Korean War; you really have to go back to post-World-War-II demobilization to get anything similar.
And to do this when the private sector is still deleveraging and interest rates are at the zero lower bound is just awesomely destructive.
http://krugman.blogs.nytimes.com/2013/12/12/unprecedented-austerity/?_r=0
"Intellectually, the case for austerity has pretty much collapsed." Unfortunately, republicans do not operate 'intellectually' and they control one house of Congress (though only through the magic of gerrymandering). They use fear, emotion and "if you repeat a lie enough, some people will believe it".
jwirr
(39,215 posts)We would be doing very well if they did.
n2doc
(47,953 posts)known as campaign contributions. Industry, the Koch Bros., and others of their ilk do. Guess who they listen to.
JRLeft
(7,010 posts)pampango
(24,692 posts)to austerity.
Jackpine Radical
(45,274 posts)who after all financed Obama's elections.