Chart: Austerity Is A Bad Idea

[one...two...tree 2,762]

Here's how CBO director Doug Elmendorf responded when Sen. Rob Portman (R-OH) nudged him about the relative merits of cutting spending (i.e. rolling back government services) as part of a national austerity program.

According to economists, "in countries that really set out to do fiscal austerity, the results tend to not be good in the short term," Elmendorf said. "I think the principle lesson of looking at countries like Greece and others is that it is a terrible situation to end up in, where one has to make drastic abrupt changes in policy. But if you look at Greece or Ireland or the experience in the UK which did not face such a crisis but has made a very, very determined pivot in its policy, those economies are not doing very well right now. And I think leaders of those countries felt they had no alternative given where they had gotten to... That they were at a point where people were not lending the governments money anymore or about to stop lending them money...So they had to make drastic changes. But that is not a situation that we would like to find ourselves in."

And we don't have to. There's no reason to make the leap to austerity, even if it's politically expedient. In fact, we have the luxury of being able to pair a credible medium-term deficit reduction plan with immediate anti-austerity policies.

It's not just Elmendorf. According to IMF economists, the GOP approach of slashing spending by even just 1 percent of GDP would under current conditions lead to a big spike in unemployment and a sizable drop in incomes, all while doing almost nothing to actually reduce deficits. The effects, according to the IMF are exacerbated when central banks can't reduce interest rates anymore -- a situation the Fed finds itself in right now. Kevin Drum put this all together in a single graph.

So the GOP talking point that the U.S. is just like Greece is key to their strategy of forcing big cuts to retirement programs and programs for the poor -- but it's extremely risky for everybody.

http://tpmdc.talkingpointsmemo.com/2011/09/chart-of-the-day-austerity-is-a-bad-idea-that-republicans-love.php?ref=fpb

[mawilson 2,133]

According to economists, "in countries that really set out to do fiscal austerity, the results tend to not be good in the short term,"

That's just it, isn't it? In the short term.

No matter which party is in office, the tendency is to avoid any short-term pain that could lead to long-term recovery and focus instead on pushing any pain into the future so the re-election bid will go well.

Apparently, no-one cares about the long-term health and stability of the country and economy, only what's "in the short term".

[Bad_Daddy 2,209]

That's just it, isn't it? In the short term.

No matter which party is in office, the tendency is to avoid any short-term pain that could lead to long-term recovery and focus instead on pushing any pain into the future so the re-election bid will go well.

Apparently, no-one cares about the long-term health and stability of the country and economy, only what's "in the short term".

Because it's votes that count. Spend, spend, spend...and keep telling everyone that spending money like there's no tomorrow even if your broke is a good thing. Kind of like having a gambling habit or being addicted to crack.

[Trumplestiltskin 5,791]

Long term the only options you have are to raise taxes and cut spending. It's inevitable.