The Congressional Budget Office's latest report says fiscal austerity measures will harm the economy. Talking Points Memo summarizes.
You don't cut your way out of a recession, in other words.
Don't tell it to Tiny Tim and the rest of the Republican cohort who believe tax cuts for millionaires and the end of important government programs are the only paths to prosperity — for the 1 percent.
Which reminds me of a fine article on a similar topic in Vanity Fair, by Joseph Stiglitz, who writes about how government spending cured an earlier depression.
Of four major service sectors—finance, real estate, health, and education—the first two were bloated before the current crisis set in. The other two, health and education, have traditionally received heavy government support. But government austerity at every level—that is, the slashing of budgets in the face of recession—has hit education especially hard, just as it has decimated the government sector as a whole. Nearly 700,000 state- and local-government jobs have disappeared during the past four years, mirroring what happened in the Depression. As in 1937, deficit hawks today call for balanced budgets and more and more cutbacks. Instead of pushing forward a structural transition that is inevitable—instead of investing in the right kinds of human capital, technology, and infrastructure, which will eventually pull us where we need to be—the government is holding back. Current strategies can have only one outcome: they will ensure that the Long Slump will be longer and deeper than it ever needed to be.