Government policy makers who force austerity on our country have not learned the economic lessons of history. Much of our sustained economic misery following the great recession of 2008 is not the result of uncontrolled or unexplained forces. Instead it is better explained as self inflicted pain directly resulting from failure both to appreciate lessons learned from past crises and to understand the well documented positive role of government stimulus in helping to restore a strong economy.1

As Paul Krugman points out, a properly stimulated economy allows people to pay down their debts and provides a more firm financial footing to facilitate increased consumer spending. Joseph Stiglitz stresses that government investments in projects like road construction have a high economic return to society. The current Congressional obsession with the deficit and emphasis on budget cutting is guaranteed to sustain self-inflicted austerity.2 Failure to sufficiently stimulate the public sector has resulted in spending cuts across the country that have put thousands of teachers and other public sector workers out of jobs. Much austerity and pain could have been avoided had Congress passed President Obama’s stimulus jobs act of 2011.3

Where did this ill advised emphasis on austerity come from? Partly it can be explained by the influence of the newly elected Tea Party members in the House of Representatives. Another factor is the no new taxes ideology of the “shrink the government” movement led by Grover Norquist. The most ironic influence, perhaps, is seeing “socialist” Europe as a model for undertaking austerity at the time of beginning recovery from recession. As early as 2010 Rep. Kenny Marchant, Texas Republican, said “Europe is already setting an example for the US” and Karl Rove, Republican strategist and former advisor to President George W. Bush,quoted the leader of the European Central Bank as saying “The idea that austerity measures could trigger stagnation is incorrect”. In 2011, Rep. Joe Wilson, South Carolina Republican said “The president should learn a lesson from the ‘German miracle’”. Senator Jeff Sessions of Alabama, top Republican on the Senate Budget committee said “we need a budget with a bold vision—like those unveiled in Britain and in [the US in the state of] New Jersey”.4

So, what are the results of this imposed austerity in Europe and N.J.? In Europe the overall economy is predicted to shrink this year and have negligible growth next year. Germany expects less than 1% growth this year and Britain’s economy is already contracting. In NJ, since Gov Christie took office in 2010 the state’s unemployment rate rose from 35th to 48th in the nation and it ranked 47th in economic growth this year.  Even the anemic predicted 2% growth rate in the US was cited by the International Monetary Fund, as the only “bright spot” in the West’s economic outlook. So much for the idea that austerity could trigger stagnation. 4 What is more alarming for the US is that, if Gov Romney becomes president and is known to support the Paul Ryan austere and draconian budget for 2013, 5 we could go the way of Europe and NJ.

IPPA strongly believes that further self-inflicted austerity at this time is ill-advised, based on current events and economic history. As well, austerity as being practiced in the US is morally unjustified, because by negatively influencing our economic growth,  the most vulnerable members of our society endure the greatest effect.


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