Austerity vs. the Obama approach

May 21, 2012 by Gene Veith

Europeans are torn about the best approach to fix their messed-up economies: austerity (cutting government budgets and deficits) or stimulus (the government spending even more money and running up even bigger deficits in an effort to jump-start economic growth). Austerity, as recommended by Germany, had been the plan, but recent elections in France and Greece have favored the pro-stimulus side. Who is the role model for this position? President Barack Obama and his stewardship of the American economy. See Germany, U.S. head to G-8 summit with starkly different economic policies – The Washington Post.

Be skeptical about political journalism

May 21, 2012 A nation of heretics

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Michael B.

When people say they’re in favor of austerity, they mean austerity for other people. Watch what older tea-party voters would do if Medicare was threatened to be cut.
Michael B.

When people say they’re in favor of austerity, they mean austerity for other people. Watch what older tea-party voters would do if Medicare was threatened to be cut.
SKPeterson

What we need is both austerity and growth; they shouldn’t be mutually exclusive but that seems to be how politicians approach the issue. Governments should cut back and become more austere in their spending habits. At the same time, they should promote growth by reducing taxes, not just on income, but on dividends and capital gains, pass laws that improve the mobility and flexibility of labor, and provide for a stable, non-inflationary environment that is conducive to long-term investment and planning. It would also benefit consumers by decreasing inflationary pricing pressures. Politicians too often have mistaken inflation for growth to the detriment of the people they claim to represent.

In terms of simple sloganeering, let the economy grow naturally by reducing the scale and scope of government interference.
SKPeterson

What we need is both austerity and growth; they shouldn’t be mutually exclusive but that seems to be how politicians approach the issue. Governments should cut back and become more austere in their spending habits. At the same time, they should promote growth by reducing taxes, not just on income, but on dividends and capital gains, pass laws that improve the mobility and flexibility of labor, and provide for a stable, non-inflationary environment that is conducive to long-term investment and planning. It would also benefit consumers by decreasing inflationary pricing pressures. Politicians too often have mistaken inflation for growth to the detriment of the people they claim to represent.

In terms of simple sloganeering, let the economy grow naturally by reducing the scale and scope of government interference.
MarkB

SKPeterson @2, it is my experience that many on the left view inflation as a neat way to increase taxes while still maintaining the facade of being on the side of the common man.
MarkB

SKPeterson @2, it is my experience that many on the left view inflation as a neat way to increase taxes while still maintaining the facade of being on the side of the common man.
Dr. Luther in the 21st Century

@#1 Cheer.
Dr. Luther in the 21st Century

@#1 Cheer.
Mike Westfall

@#1, Good point.
Government social programs have enslaved just about every one.
Mike Westfall

@#1, Good point.
Government social programs have enslaved just about every one.
DonS

As we discussed on another thread, “austerity” is a false choice. There is no substantial reduction in government spending in Europe, even under the so-called “austerity” options, as spending in all countries, even Greece, is still up sharply over where it was just a few years ago, after the extreme increases in government spending of 2005-08. The same is true here in the U.S. Our spending levels increased sharply in the late 2000’s to try to spend our way out of recession, and we are not decreasing them even back to historical norms. Here in California, Governor Brown’s definition of “austerity spending cuts” is an 8% increase in spending. It’s austere, in his mind, because he wanted to increase spending 15%.

The average U.S. family has decreased its own personal budget between 5 and 15% since 2008. The same is probably true in Europe. If governments did the same, in real spending cuts, it would make a startling economic difference in terms of putting government budgets into balance.
DonS

As we discussed on another thread, “austerity” is a false choice. There is no substantial reduction in government spending in Europe, even under the so-called “austerity” options, as spending in all countries, even Greece, is still up sharply over where it was just a few years ago, after the extreme increases in government spending of 2005-08. The same is true here in the U.S. Our spending levels increased sharply in the late 2000’s to try to spend our way out of recession, and we are not decreasing them even back to historical norms. Here in California, Governor Brown’s definition of “austerity spending cuts” is an 8% increase in spending. It’s austere, in his mind, because he wanted to increase spending 15%.

The average U.S. family has decreased its own personal budget between 5 and 15% since 2008. The same is probably true in Europe. If governments did the same, in real spending cuts, it would make a startling economic difference in terms of putting government budgets into balance.
steve

DonS, don’t worry, Brown will pay for the budget by raising taxes on the group of people who are leaving the state the fastest.
steve

DonS, don’t worry, Brown will pay for the budget by raising taxes on the group of people who are leaving the state the fastest.
bike bubba

Well, if we went to figure out what we need to do regarding austerity versus government spending to “boost” the economy, keep in mind that the Depression was only a recession until Hoover and Roosevelt decided to spend and regulate their way “out of it,” and it ended not with the spending and regulation, but rather with Hitler’s march into the Sudetenland and England and France’s realization that the guy was for real, and they’d better stock up on some necessaries for war.

(and unemployment was still around 10% at Pearl Harbor)

Or, put differently, compare states that cut spending (e.g. Indiana) versus those that did not (Illinois, California). Or Germany vs. Greece, Portugal, and such.

Or, for that matter, ask yourself whether a guy who thought Solyndra was a good investment is well prepared to make investments on behalf of the public to begin with. It’s not a subtle issue; those without skin in the game tend to play it halfheartedly and foolishly.
bike bubba

Well, if we went to figure out what we need to do regarding austerity versus government spending to “boost” the economy, keep in mind that the Depression was only a recession until Hoover and Roosevelt decided to spend and regulate their way “out of it,” and it ended not with the spending and regulation, but rather with Hitler’s march into the Sudetenland and England and France’s realization that the guy was for real, and they’d better stock up on some necessaries for war.

(and unemployment was still around 10% at Pearl Harbor)

Or, put differently, compare states that cut spending (e.g. Indiana) versus those that did not (Illinois, California). Or Germany vs. Greece, Portugal, and such.

Or, for that matter, ask yourself whether a guy who thought Solyndra was a good investment is well prepared to make investments on behalf of the public to begin with. It’s not a subtle issue; those without skin in the game tend to play it halfheartedly and foolishly.
Bob

# 5

Riiiiiiiiiiight.

On the contrary. Take off your ideological blinders and see real people and real situations.

http://www.youtube.com/watch?v=fkEU3JjNARs

In a democracy like ours, it’s called taking care of each other. Whether it’s through the private, nonprofit, or public sector, usually a mixture of the three, it’s called “the common good.” Until Reagan, it was our culture’s common language. It still is, but it’s frayed, unfortunately.

It’s what’s behind the majority of Americans who believe in the rightness of a social safety net. It keeps us from turning into a libertarian hell hole where selfishness rules and Christianity gets swallowed up by the “every man for himself, period” philosophy.

Government assistance can come in a million ways, whether in the form of road construction, interstate highways, clean air and water, helping the poor, disabled, blind, and dispossessed of all stripes.

I feel sorry for you that you have such an ideological, virulent, “I hate government” point of view.
Bob

# 5

Riiiiiiiiiiight.

On the contrary. Take off your ideological blinders and see real people and real situations.

http://www.youtube.com/watch?v=fkEU3JjNARs

In a democracy like ours, it’s called taking care of each other. Whether it’s through the private, nonprofit, or public sector, usually a mixture of the three, it’s called “the common good.” Until Reagan, it was our culture’s common language. It still is, but it’s frayed, unfortunately.

It’s what’s behind the majority of Americans who believe in the rightness of a social safety net. It keeps us from turning into a libertarian hell hole where selfishness rules and Christianity gets swallowed up by the “every man for himself, period” philosophy.

Government assistance can come in a million ways, whether in the form of road construction, interstate highways, clean air and water, helping the poor, disabled, blind, and dispossessed of all stripes.

I feel sorry for you that you have such an ideological, virulent, “I hate government” point of view.