Saturday, March 1, 2014

Austerity Is A Failed Religion

American Austerity, Charted Yet Again
Austerity is both awful policy and awful politics.  It doesn't work.  And the people who advocate for these policies do not care about deficits; they care only about shifting the tax burden down the income scale.
If spending had tracked what happened under Bush II, discretionary spending would be about a third — or more than 2 percent of GDP — higher. Since there is good reason to believe that the multiplier is 1.5 or more, this would mean real GDP 3-plus percent higher, closing much if not most of the output gap, and probably an unemployment rate below 5.5 percent. In short, we would have had a vastly healthier economy but for the de facto victory of disastrous austerity policies.
As Atrios often says, nobody cares about the deficit.  Nobody.  The deficit scolds never, ever suggest higher taxes on  high incomes or wealth under any circumstance.  

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