How else do you explain the notion, apparently all the rage inside the Washington beltway, that Austerity = Prosperity?
Every single Republicon and Tea Bagger, as well as most Blue Dog Democraps and many clueless so-called pragmatic moderates, has endorsed the idea that in an economic recession/contraction the federal government must "tighten its belt" and "live within its means". The federal government deficit needs to be reduced [if not closed entirely], and the public debt needs to start being paid down. The social safety net must be shrunk,
Doing so, they assert, will remove uncertainty from the marketplace & restore business/investor confidence. Investors will invest in businesses, who will in turn open the jobs floodgates, thereby unleashing pent-up consumer demand that will encourage business to further expand, provide more jobs, yadda, yadda, yadda. America will enter a new Gilded Age of glorious prosperity that would make JP Morgan jealous. All this economic booming will eventually fill government coffers with sufficient revenues to retire its massive public indebtedness. Another supply-side love story.
Too bad it's a complete fantasy. Austerity is not Prosperity... as any sane English speaker might suspect.
In the real world in which we live today, austerity still means... well, austerity. You know, rice and beans for dinner, rags for clothing, that sort of thing. Prosperity, on the other hand, means lobsters & filet mignon, Armani suits, etc. Ne'er the twain shall meet.
Austerity policies do not produce prosperity results, at least in the real world situation we find ourselves in today. The central economic problem facing the country today, tomorrow and for several years hence is NOT government debt & deficits. It is, rather, the lack of aggregate demand relative to productive capacity, which is being driven by the debt deflation & private deleveraging occurring as a result of the bursting of the housing bubble.
Unless and until the deleveraging - which typically takes many years - is complete, consumer demand will remain depressed. As long as demand remains depressed, businesses have little incentive to invest or expand or hire workers, resulting in continued long term unemployment.
Further compounding these depressing dynamics by shrinking government expenditures can only add to the misery. Reducing discretionary expenditures means less money flowing into the economy, less demand for the goods & services of government contractors & suppliers, less demand for college education (think Pell grants), less demand for basic scientific research, less demand for all the sorts of things that government buys or provides. Shrinking the federal workforce only adds to unemployment.
You can't fix a demand problem by further reducing demand!
This isn't to say that government deficits and debt aren't a problem in the long run. They are. Over the long run, we DO need to address our structural deficit problems and begin reducing the public debt to a more sustainable percentage of GDP.
But it isn't anywhere near the most important problem facing us today...
We have time, and the solution - a reasonable combination of:
- program changes (e.g., a de minimus 1 year increase in the retirement age, federal negotiation of prescription prices, capitated payments for health care outcomes rather than fee-for-service),
- spending cuts (winding down the Afghan & Iraqi war efforts, elimination of ag subsidies to big business, ) and
- revenue raisers (a financial transactions tax, a financial services tax, broad-based individual & corporate tax reforms, removal of the income cap for the SocSec payroll tax, sharply higher/more progressive tax rates on [adjusted] taxable incomes over $100K/$1MM/$10MM/$100MM/$1B)
Better yet: it is supported by a broad & substantial majority (roughly, 70%, depending upon the specific poll) of the American voting public.
But the Tea Party trolls and Republicon corporatist plutocrats are not listening. Unable to speak their Bizzarro world native language, apparently they cannot hear us.