Austerity Snake Oil
Courtesy of Beverly Bandler
“Fiscal contraction…is precisely the doctrine expounded by Herbert Hoover in 1932.” – Paul Krugman
—Joseph E. Stiglitz “I think Europe is headed to a suicide…There has never been any successful austerity program in any large country.” “Decreasing growth is causing the deficit, not the other way around. I think that austerity approach is going to lead to high levels of unemployment that will be politically unacceptable and make deficits get worse.” Joseph Stiglitz is an American economist, professor, author, recipient of the Nobel Memorial Prize in Economic Sciences (2001) and John Bates Clark Medal (1979).
—Christina D. Romer “The evidence is stronger than it has ever been that fiscal policy matters—that fiscal stimulus helps the economy add jobs, and that reducing the budget deficit lowers growth at least in the near term. And yet, this evidence does not seem to be getting through to the legislative process…That is unacceptable. We are never going to solve our problems if we can’t agree at least on the facts. Evidence-based policymaking is essential if we are ever going to triumph over this recession and deal with our long-run budget problems.” Christina D. Romer is professor of economics, author, and former chair of the Council of Economic Advisers in the Obama administration.
—Paul Krugman “The truth is that recovery would be almost ridiculously easy to achieve: all we need is to reverse the austerity policies of the past couple of years and temporarily boost spending. Never mind all the talk of how we have a long-run problem that can’t have a short-run solution—this may sound sophisticated, but it isn’t. With a boost in spending, we could be back to more or less full employment faster than anyone imagines.
But don’t we have to worry about long-run budget deficits? [John Maynard] Keynes wrote that ‘the boom, not the slump, is the time for austerity.’ Now…is the time for the government to spend more until the private sector is ready to carry the economy forward again. At that point, the US would be in a far better position to deal with deficits, entitlements, and the costs of financing them. Meanwhile, the strong measures that would all go a long way toward lifting us out of this depression should include, among other policies, increased federal aid to state and local governments, which would restore the jobs of many public employees. All that is blocking recovery is a lack of intellectual clarity and political will.” Paul Krugman is an economist, professor, columnist, recipient of the John Bates Clark Medal (1991) and the Nobel Memorial Prize in Economic Sciences (2008).
—Robert Kuttner “Despite [the President’s] recent victory, if he is too eager to make a deal, he –and we — will get rolled. Last time, Boehner’s Republicans saved Obama from himself. This time, it will be up to his fellow Democrats.”
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