Home Budget, Economy Why Not Try Something Besides Austerity?

Why Not Try Something Besides Austerity?


Both Democratic and Republican Governors—- and, in fact, both parties at the national level—- are in hysteria mode when it comes to tackling the designated Big Problem du jour: budget shortfall, deficit. Note: job-creation is now playing second fiddle; you occasionally hear a tip-of-the-hat to job creation, as in “we must get our financial house in order first, in order to create jobs”—- a new sort of political double entendre. This has created the remarkable spectacle of states slashing public sector jobs in the name of austerity, which only adds to unemployment, instead of reducing it (when the BLS provides the latest stats on unemployment, I wish they’d tell us just how many of those new first-time unemployment applications were the result of governors’ firing state employees). Does this make sense? Two economists say “no,” and offer some sensible, pragmatic alternatives to austerity in the interview below. Instead of simply cut, cut, cut, and thereby destroying our society in the process, why not try a few other policies as well?

  • Elaine in Roanoke

    Governors, I suppose, have to react differently. Most are like Virginia. Their constitutions require them to balance budgets, even if they simply use “creative bookkeeping” as we did last year.

    The national government, unlike the states, can issue fiat money. (That’s why to a certain extent the federal budget deficit is not the crisis the conservatives make it out to be. Indeed, the problem with fiat currency is that it loses value when government refuses to tax to guarantee its viability…as the GOPers are trying to do now.)

    We needed to have a continuation of some sort of stimulus for the states in order to avoid the layoffs that are occurring all over the nation. That didn’t happen.

  • glennbear

    The corporate world is who politicians are trying to placate. In the corporate world the XYZ widget company has cut their workforce to weather the economic downturn when fewer widgets are sold. The CEO of XYZ widgets who controls political expenditures is going to further the political campaign of the governor who does the same with the public workforce. This mindset fails to recognize that government does not make widgets but provides services which in all likelihood are needed more in bad economic times.

  • Teddy Goodson

    revenue enhancements as part of the package, i.e., t.a.x.e.s. The Republican position that budget shortfalls can only be dealt with by cutting jobs and cutting taxes is asinine, as in Not Serious. The purpose of government is to protect its citizens, and enable each and every one to lead secure lives while reaching their best potential; its purpose is not to show a profit, nor is it to enhance the profits of businesses, other than insofar as doing so creates better lives for all of its citizens. Everything else is windowdressing. The Ryan budget, and the entire Republican vision of America’s future would create a nasty society, one in which most Americans would not want to live, nor one which they would they to bequeath to their children. This is a moral argument, and it’s time Democrats started making it.