A Total Fraud
It only took a matter of picoseconds to figure out that the calls for austerity and deficit reduction were rank hypocrisy on the part of the Republicans, the party that is almost singlehandedly responsible for them, but it takes a deeper look to determine if the deficits are a real problem, beyond the politics, in real world economics.
Thomas Ferguson and Robert Johnson, Senior Fellows at the Roosevelt Institute wrote a paper on the issue: A World Upside Down? Deficit Fantasies in the Great Recession [PDF]
Key findings:
· Claims that economic growth falls off at anywhere near current US levels of debt to GDP are untrue. Neither is it the case that cutting deficits magically stimulates the economy. And stories about 90% limits are untrue.
· The CBO August 2010 budget revision implies that the U.S. is less endangered than most analysts claim.
· Private oligopolies in health and defense spending, along with the possibility of another banking crisis, are the real threats to the deficit, not entitlements.
· Social Security is in essentially no danger for decades and does not require any fix.
· It would be easy to stimulate the economy with a program of public investment that would substantially reduce public debts in the long run.
If you look at the disaster that Ireland, the prime example of the “success” of austerity, has become, you will see where the “Deficit Fantasy” is taking us.
2 comments
Santayana got it right: “Those who cannot remember the past…” etc. I for one do not relish the coming repetition.
Oh, yes, let’s party like 1937 because the “deficit” is too high. What is obviously too high is the unemployment rate, and doing something about that is the main part of the solution for everything else.