Still reeling from a deep recession compounded by disunity amongst Europe’s leadership, it appears that Angela Merkel’s push for strict austerity measures has begun to fall apart. On Monday, Nicolas Kulish at The New York Times wrote that “from trading floors to polling stations to the streets of cities across Europe, the message appears increasingly to be that countries cannot cut their way to fiscal health.” And why should they? A growing body of evidence now suggests that these same austerity measures, designed to address sovereign debt, have actually compounded matters in the form of reduced tax revenues, rising unemployment, and spiking bond yields in Spain, Italy, and Portugal. What can we learn from this Austerity Fail here at home?
GOP leadership and their bobbleheads on Faux News have been arguing since the passage of the Stimulus Bill (the American Recovery and Reinvestment Act of 2009) that deficits should take priority over job-creating investments in infrastructure, energy, education, and the sciences. But since that time, and in spite of Republican efforts to strangle President Obama’s legislative agenda, the US economy has improved significantly, with unemployment falling to 8.2% as of March of this year, down from a peak of around 10% in October of 2009. We’ve had 25 straight months of job growth. Since February 2010, the nation’s private employers have added more than 3.9 million jobs, or roughly 164,000 per month. Over the same period, however, some 485,000 government jobs were lost. If Republicans had had their way, and we had prioritized deficits over stimulus as Angela Merkel did in the Eurozone, these numbers would be far worse. Where would we find ourselves today?
Our nation’s long-term fiscal outlook is still untenable, with over $61.6 trillion in unfunded liabilities. Yet just last week, the GOP House budget proposed cuts which didn’t do a single thing to address these liabilities, and they were promptly skewered by Catholic Bishops for cuts that would disproportionately affect the poor and the disabled. Meanwhile, they are proposing more tax cuts for millionaires and billionaires - the same failed policies of the past that cost our government $750 billion dollars in revenue since 2001 for just the top 1% of earners. This trickle down nonsense is not only a major driver of our deficits but the evidence overwhelmingly shows that tax cuts for the rich do not create jobs. Period. So why, then, if as John Boehner said today in response to the Catholic opposition, “touch choices must be made”, do the GOP continue to vilify the poor and the underprivileged when they know full well that their corporate welfare policies are costing taxpayers so much money and not delivering any promised job growth?
It’s past time we close tax loopholes for millionaires and billionaires, level the playing field amongst corporations by broadening the base and lowering the corporate tax rate, and enact sweeping reforms of our nation’s entitlement system. But kicking the economic beast when it’s down, as Republicans keep trying to do, is simply bad economic medicine. The GOP likes to stoke up fear and nationalism to win elections. Their central message, driven by a strategy of divide and conquer, is based on the obvious fact that America’s Long term fiscal path is unsustainable. This may be true. But that doesn’t mean we should follow the Eurozone into economic purgatory. Our nation is robust and wealthy enough to use stimulus vehicles during recessions to save and create jobs. It should be the policy of the United States to do so.
-Seth Halpern (@sdhalpern; Washington, DC)