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A tweet from leading progressive blogger David Dayen (a Kossack who recently left his gig at FireDogLake) served as the impetus for a well-read post by Brad Plumer over at the WaPo blog, on Wednesday. In it, Plumer provides us with a quite provocative graphic comparing just-passed U.S. austerity measures with those in a selection of European nations over the past couple of years.

If this doesn’t give readers pause with regard to what’s just happened in D.C. and what lies ahead for our country in 2013—with, almost certainly, more austerity to come in just a few weeks—I don’t know what will.

U.S. now on pace for European levels of austerity in 2013
Brad Plumer
Wonkblog
Washington Post
January 2, 2013   3:09 pm

For years now, economists like Paul Krugman have been criticizing countries in Europe for engaging in too much austerity during the downturn — that is, enacting tax increases and spending cuts while their economies were still weak.

But after this week’s fiscal cliff deal, the United States is now on pace to engage in about as much fiscal consolidation in 2013 as many European nations have been doing in recent years — and more than countries like Britain and Spain…

Bold type is diarist’s emphasis.

Plumer cautions us that his effort is just an approximation, and it’s quite difficult to provide true apples to apples comparisons…

…Now, it’s possible to draw very different conclusions from this chart. One could argue that the U.S. is about to repeat Europe’s mistake of premature austerity. Alternatively, one could say that the United States is in a better position to begin trimming its deficits than Europe was, because our economy is healthier. (We also have a central bank that’s providing more aggressive monetary stimulus.)
I could continue on here for many pages (i.e.: Nobel Prize-winner Joseph Stiglitz just totally thrashed U.S. and European central banks in public comments he made in India, stating: “The crisis has shown that one of the central principles advocated by Western central bankers--the desirability of central bank independence--was questionable at best… All public institutions are accountable, and the only question is to whom.”), but I don’t want to detract from the basic content of this post.

Instead, I urge you to read Plumer’s piece—while not lengthy, there’s still a hell of a lot more to it than I’ve conveyed herein—and, above all else, checkout his graphic! You may do both by clicking RIGHT HERE. (Sorry, but I don’t have the rights to republish it.)

At the very least, this is food for context and thought, IMHO.

#            #            #

UPDATE (9:30PM EST, 1/4/13):

There's a post up on "the boards" which attempts to "debate" this post, specifically with regard to what's occurring here, in the U.S., versus the history of austerity measures in Great Britain.

But, as I noted in comment exchanges with the author of that post, there's nothing to debate.

I pretty much covered the reasons for that in my comments there, but specifically in my last comment in that post, after noting that a direct comparison between the austerity measures in the two countries was futile (via anything other than the overly-simplistic manner in which Dayen and Plumer are doing it, above), since Great Britain has been dealing with government-imposed austerity for well over three years, while those that are imposing it in the U.S. are just seeing it come to fruition now.

Additionally, due to the effects of the Citizens United v. FEC SCOTUS decision here in America, there's massive funding of a very large lobbying and media campaign supporting the implementation of austerity measures here, as well (not to mention all of the resources of numerous entities, such as the Peterson Foundation, the Third Way and Fix-the-Debt, to name just a few).

So, with that context, here's my last comment from the other post, reposted here in its entirety...

The real problem, which is one that Stiglitz....

....has been lecturing about for well over a decade (and an issue which Meteor Blades, myself and many others in this community have posted countless diaries about over the years), is the totally absurd dependence that almost the entire economics profession has upon an incredibly flawed single statistic: Gross Domestic Product (GDP). But, since it's used so widely around the world as "the measuring stick," even Dayen and the WaPo writer focused upon that single statistic, to the point where it was the basis for much of their commentary in the WaPo blog post.  At the end of the day, however, it belies other, often more important stats, and it doesn't even begin to get into the (again, often more important) qualitative aspects of economic reality, in general (anywhere). But, again, it is the most widely-used and grossly over-simplified metric that is discussed when it comes to a country's health. Even nowadays.

So, from a GDP standpoint, which is where Dayen and Plumer were myopically focused--and this is how many/most economists analyze this issue, even though it's flawed and at a very epic level--it is totally credible; again, even if it doesn't even begin to do anything other than scratch the veneer of the story!

What Brit's getting it, at least from my perspective, is that he's arguing the same thing that folks like Stiglitz and Krugman have been stating for years: GDP is useless [as far as painting an accurate picture of the situation's concerned] without noting many other stats and qualitative issues.

But, even Krugman and Stiglitz have been known to put forth an argument while doing so by citing, almost exclusively, just GDP stats to make their point. And, that's due to the fact that it's easily understood by the "very serious people," and most of the economic community, all of whom have about as much creativity as a head of iceberg lettuce.

So, technically speaking, IMHO, Dayen and Plumer are properly putting forth their case (in terms of it being within a framework acceptable to an economist), but as Kossack Brit notes in the other post, it doesn't even begin to tell the greater truths of the story.
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Comment Preferences

  •  The Ides of March may just take on new meaning. (9+ / 0-)

    I'm not looking forward to seeing this battle take on new strength in a couple of months. It's going to be ugly.

  •  A healthier US economy simply means (12+ / 0-)

    There's more to plunder.  And with the election decided, the plunderers know who they'll be making the deal with.  Let the plundering begin!

    Have I told you lately that any significant cuts to SS, Medicaid, or Medicare are my red line when it comes to support for the Democratic party?

  •  I'd be careful with this analysis (15+ / 0-)

    Plummer is including all the tax hikes in his austerity, which is correct. But I dont that many liberals want to acknowledge that.

    He is also assuming the entire sequester or some equivalent goes through, which is possible, but not very likely imo.  

    •  The headline of this post is a question... (13+ / 0-)

      ...however, the commentary by both Plumer and Dayen conveys substantially more certainty (with regard to the negative implications of the matter) than my post. But, I think you already (tacitly) recognized that in your comment. I think the entire matter is notable, and perhaps worthy of a community discussion, if nothing else. Like I state at the end of the post: "Food for thought."

      "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

      by bobswern on Fri Jan 04, 2013 at 12:58:53 PM PST

      [ Parent ]

    •  disagree on both points (8+ / 0-)

      The sequester changes are supposed to be paid for (both Republicans and Obama seem to insist on this.) We're just rearranging deck chairs in the next two months for the sequester.

      Also, the tax hikes for the rich don't harm the economy. (Several studies showing that, including on the Congressional Republicans tried to suppress.)

      Plummer does make a note of that, but ignores it to make the math easy.

      •  I agree, I dont think the tax hikes (3+ / 0-)
        Recommended by:
        ferg, Aquarius40, greenearth

        will have much of an effect the economy.

        I meant you could broadly classify them as austerity.

      •  Plumer ignores other things too, though (1+ / 0-)
        Recommended by:
        divineorder

        For example, Plumer ignores the fact that state and local governments continue to cut jobs and spending and raise year-on-year, even after four years of the largest cuts (by percentage) in recent history. California, for example, just raised some taxes a little on the highest earners, and also raised their sales tax, which hits basically only the bottom 50% with any significant impact. And they continue to cut their spending year on year.

    •  I thought this was just a fiscal "curb"? (1+ / 0-)
      Recommended by:
      jj32

      Where stepping off was no big deal?

      That's what we wanted Obama to do, right?

      But that would have entailed the full sequester and even higher taxes.

      Or if we had no sequester, and let all the Bush tax cuts expire as some progressives argued?

      •  Well, stop, because you're wrong (2+ / 0-)
        Recommended by:
        divineorder, TracieLynn
        But that would have entailed the full sequester and even higher taxes.
        Uh yeah. Until a deal was reached. And any deal that was reached would have been retroactive, and so it, you know, wouldn't have entailed the full sequester or higher taxes even for the amount of time until the deal was reached. Indeed, unemployment would have been retroactive too, because the Republicans aren't suicidal enough to fuck that many people that hard. How do I know? They just proved it.

        So yes. It would have been no big deal.

        You're gloating about 'winning' an argument when you didn't even understand the argument. You're dancing around in the end zone celebrating when everyone around you was playing baseball.

    •  I'm of the mind (1+ / 0-)
      Recommended by:
      northsylvania

      that Bush's tax cuts, and the payroll tax "holiday" (I really hate that term) had little if any stimulative effect, and whatever effect they did have in terms of stimulus was far outweighed by both the explosion of debt caused by Bush's tax cuts, and the destabilizing effect of cutting payroll taxes on Social Security. Tax cuts are a blunt instrument for stimulus, and when targeted at the very wealthy have even less of an effect than, say, just giving people jobs directly.

      By similar reasoning, allowing Bush/Obama's tax cut to expire would not have had a noticeable effect on the overall economy. Yes, people's paychecks would be smaller, but inflation would be lower, the dollar stronger, and people would be able to buy roughly the same amount of stuff.

      With respect to the payroll tax and Social Security, however, my fear is that the seal is already broken- transferring money from the general fund to SS effectively states that we are on a unified budget and therefore, that SS is a welfare program now, not a wage insurance program. You can't undo the change in consciousness that that move instilled.

      Small varmints, if you will.

      by aztecraingod on Fri Jan 04, 2013 at 02:43:40 PM PST

      [ Parent ]

      •  right, just to be clear again, I support (1+ / 0-)
        Recommended by:
        aztecraingod

        the tax hikes and agree with the reasoning you and ferg offered on why they dont have an economic effect.

        I just meant you could characterize "tax hikes" broadly as austerity and Plummer seems to imply that in his article. Austerity in Europe hasnt just meant spending cuts was the point I was trying to make.

      •  So, uh... (1+ / 0-)
        Recommended by:
        Meteor Blades
        I'm of the mind that [...] the payroll tax "holiday" (I really hate that term) had little if any stimulative effect.
        So, is that based on anything? Like, can you cite an actual reason that you believe that? Or is the citation 'aztecraingod's gut'?

        All the analysis I've read about the payroll tax holiday told me that, like any way of getting decent amounts of money into lower income people's hands without giving the lion's share to the rich, it was extremely stimulative, nearly as much so as unemployment on a per-dollar basis.

        By similar reasoning, allowing Bush/Obama's tax cut to expire would not have had a noticeable effect on the overall economy. Yes, people's paychecks would be smaller, but inflation would be lower, the dollar stronger, and people would be able to buy roughly the same amount of stuff.
        Are you one of those people that think that 'secret inflation' is a zillion times higher than the real numbers or something? Because real inflation, in the actual world, is close enough to zero (and will be for some time) that this argument doesn't even make the slightest bit of sense. (And by the way, the argument that tax hikes make the dollar stronger is pretty amazing too.)

        I guess expecting rational economic analysis in the comment section of any web site is unduly optimistic.

        With respect to the payroll tax and Social Security, however, my fear is that the seal is already broken- transferring money from the general fund to SS effectively states that we are on a unified budget and therefore, that SS is a welfare program now, not a wage insurance program. You can't undo the change in consciousness that that move instilled.
        This is poppycock too. 95% of the country has no clue how Social Security funding works in the first place. The Republicans have been saying that it's a huge driver of the deficit for twenty years ('THE IOUS ARE WORTHLESS!'). Even a huge proportion of Democratic politicians seem to think that Social Security has to be 'fixed' in order to fix the deficit. If you think that somehow this is some kind of magic moment that is going to cause a giant consciousness shift on the part of a bunch of people who still believe in the confidence fairy, you've been watching way too much c-span.
  •  How is it that anyone thinks that cutting (29+ / 0-)

    Social Security for 56 million people would NOT hurt the economy?

    http://www.ssa.gov/...

    How many billions of dollars would be taken out of the economy if benefits were reduced?

    I'm so frustrated that these questions are not front and center in this debate about Social Security - not only does cutting SS NOT do anything to affect the deficit, but it also would HURT the economy if we were to reduce those benefits.  What's the economic upside?  There is NONE.

  •  summary of austerity (5+ / 0-)

    From the Plummer post

    $125B - payroll tax cuts expire
    $78B - sequester
    $50B - spending cuts from 2011 Budget

    $27B - expired tax cuts for rich
    $24B - Obamacare taxes (primarily paid by rich)

    Since the bottom two are taxes on the rich, they aren't problems for austerity (rich tax rates don't affect the economy - low multiplier). The first three are the austerity problems.
  •  While I certainly agree that austerity (19+ / 0-)

    is the wrong thing, his calculations count tax increases as austerity (I understand the concept), but I would not have renewed all the Bush tax cuts and repealed the Obamacare tax increases to prevent "austerity."

    A back-of-the-envelope calculation suggests Congress has enacted around $304 billion in tax hikes and spending cuts for the coming year, an austerity package that comes to about 1.9 percent of GDP. (That’s merely the size of the cuts and taxes; it’s not necessarily the effect on growth.)

    This includes the expiration of the payroll tax cut, which will raise about $125 billion this year. It includes $50 billion in scheduled cuts to discretionary spending from the caps in the 2011 Budget Control Act, as well as $24 billion in new Obamacare taxes and $27 billion in new high-income taxes. It also includes about $78 billion from the now-delayed sequester cuts — assuming that these either take effect or are swapped with other cuts.*

    I know you wanted the social security tax cut for another year, and arguments can be made for it, but it always was a temporary stimulus and social security is stronger when not funded from general revenue.

    The cuts are absolutely wrong for now.  I agree on that.  

    My hope is we can keep cuts to the point that they do not destroy the slow growth.  

    In a perfect world, in 2009 the stimulus would have been greater, and there would hav ebeen no austerity.  

    The defeat of 75 Dems in November 2010 changed that.

    No doubt, it's possible Obama or Dems in Congress could have done things different in 2009,10, 11, and 12, but we are here now.

    I generally agree with Stiglitz and Krugman, but until the Rs are pushed out of the House, things will be difficult.  The Republican may even force another crash.

    In any event, I think the tax increases were necessary, even if they reduce demand to some degree.

    Join us on the Black Kos front porch to review news and views written from a black pov—everyone is welcome.

    by TomP on Fri Jan 04, 2013 at 01:03:06 PM PST

    •  The defeat of 75 Dems in November 2010 changed (8+ / 0-)

      the possibility of no austerity, although Obama, in a deal I did not like at the time, was able to cut a second stimulus in December 2010 by renewing the tax cuts and implementing the social security tax cut.

      If we listened to Krugman and Stiglitz in 2009, we might have avoided this, but the admin chose a different road.  Summers got us a Japanese style recovery. (potentially 10 years of low growth).  Republcian defunding of government (statte and local) has exascerbated that.

      Join us on the Black Kos front porch to review news and views written from a black pov—everyone is welcome.

      by TomP on Fri Jan 04, 2013 at 01:06:44 PM PST

      [ Parent ]

    •  I don't agree with everything you're saying... (8+ / 0-)

      ...but I rec'd your comment, nonetheless.

      77% of this country is now being taxed at higher levels than they were last week. The argument that "the payroll tax cut was always temporary" also, quite frankly, held for the Bush taxcuts, too.

      The bottom line on consumer spending is still the bottom line. (And, the bottom line on our GDP is most certainly affected by the bottom line on consumer spending, discretionary income, and so forth.) And, our country is doing nowhere near well enough (yet) to immediately take $1,000 per year out of the pockets of those earning $50,000, no matter how transparent the Fed might be (in their most recent and rather hawkish FOMC minutes), all of the sudden.

      It is what it is.

      It's spilled milk. But, that milk's gonna' smell pretty rotten, soon enough.

      "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

      by bobswern on Fri Jan 04, 2013 at 01:14:55 PM PST

      [ Parent ]

      •  I think taxation should go up (8+ / 0-)

        (eventually) on the upper and middle classes.  We will not have stable social welfare programs unless all pay in.  Unfortunately, the Bush tax cuts are law (for know) and we are attmepting to fund a gov't at 22 or so % of GDP while bringing in 19% or less, thereby setting up the who defict issue.  That was Bush's idea, along with giving wealthy folks more money.

        I'd prefer a higher rate than 39% of incomes over 400,000 (really 200,000), but unless the American people had an epiphany lately, I doubt we will see them in the near future.

        The Clinton tax rates should be in effect for all people when unemployment drops to 5 or 6% (pick a number), except for those making under $30,000 or so.  

        Social security and Medicare have their support because people pay into them and feel that they earned them.      

        I understand that in a recession, rasiing taxes on those in the middle class is ocunterproductive because it takes demand out of the system, but I do not buy the idea that taxes must be low for all people.  

        The truth is that people who make over 50,000 can afford top pay the extra 2%.  What we shoulds do is raise the social secuity cap about 100,000 or whatever it is (so that more money comes in).

        We need a moreprogressive tax system higher rates on wealthy and upper middle class people, but we also need to end the idea that taxes should always be reduced and peopel can get something for nothing.

        The entire Reagan reaction was about cutting taxes, and it created the most unequal society since the 20s.

         

        Join us on the Black Kos front porch to review news and views written from a black pov—everyone is welcome.

        by TomP on Fri Jan 04, 2013 at 01:25:21 PM PST

        [ Parent ]

        •  The two biggest disappointments for me... (6+ / 0-)

          ...in terms of the legislation that was just passed in D.C. were: a.) a measley 3.6% (or thereabouts) increase in cap gains; and, b.) premature reinstatement of the Payroll Tax Cut.

          Additionally, there is very little effort being made at promoting a Wall Street transactions tax. I believe this should be front and center.

          There's a lot more to my thinking on all of this, of course. (Stating the obvious: This is just top-of-mind for a comment in this post.)  

          "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

          by bobswern on Fri Jan 04, 2013 at 01:48:32 PM PST

          [ Parent ]

          •  Yes to cap gains. I'm more neutral (8+ / 0-)

            about Payroll Tax Cut, but I would have been fine with another year as a stimulative measure.  Another is dividends being taxed at the cap gains rate, which is an increase, but not enough.

            Wealth (return on investment), whether in capital gains or dividends should be taxed at least at the same rates as work.  That is a core principle with me.  

            There was never a chance of that with this President or many Dems in Congress.  I am glad they increased the rates, but it is a fundmental fairness princciple that investment returns should not have a preferential rate.

            We're so far away from simple decency.  I may not see it in my lifetime, but I hope the struggle for it can help people on the way to some future.

            Simple decency in capitalism is so far away (and maybe impossible).  And that's not even socialism.  

            I also agree the financial transactions tax would help.

            We are still an extremely unequal society.  And will be for the foreseeable future.  Small improvements do matter (e.g., another year of unemployment insurance payments for 2,000,000 help those people even though there are millions more getting nothing), but we are very far from simple decency.

            It is what it is.  We each try in our own way to make it better.  
             

            Join us on the Black Kos front porch to review news and views written from a black pov—everyone is welcome.

            by TomP on Fri Jan 04, 2013 at 02:02:22 PM PST

            [ Parent ]

    •  Recc'ed for egregious common sense (9+ / 0-)
      In a perfect world, in 2009 the stimulus would have been greater, and there would hav ebeen no austerity.  

      The defeat of 75 Dems in November 2010 changed that.

      No doubt, it's possible Obama or Dems in Congress could have done things different in 2009,10, 11, and 12, but we are here now.

      I generally agree with Stiglitz and Krugman, but until the Rs are pushed out of the House, things will be difficult.  The Republican may even force another crash.

      Being a Brit, I have a clear counterfactual test of what it's like to a real right wing Government in power with proper austerity (unlike the US where Obama is a brake on the House)

      We're entering a triple dip recession, with service industry output (75 per cent of the economy) falling last quarter.

      Please bear this in mind when you call the White House as bad as the right wing neoliberals.

      It ain't. And I'm living with the reality.

      The Fall of the House of Murdoch -with Eric Lewis and all the latest Leveson evidence out now!

      by Brit on Fri Jan 04, 2013 at 02:32:51 PM PST

      [ Parent ]

      •  Eh, tell me about it, (4+ / 0-)
        Recommended by:
        Brit, kat68, greenearth, Fogiv

        Cost me over £73 to fill my car today.

        Ron Reagan: "Sarah Palin's constituency are people who wear red rubber noses and bells on their shoes."

        by AnnetteK on Fri Jan 04, 2013 at 02:38:18 PM PST

        [ Parent ]

      •  Absolutely (1+ / 0-)
        Recommended by:
        Brit

        Unless you have lived through the Coalition's cuts, seen libraries and hospitals closing left and right, watched the potholes appear and the roads flood, stood by as your local government gets privatised, turned the heat off in half the house and huddled in the other half, and gotten a 20% pay cut on top of it...if you're employed, well you may or may not have all that to experience, depending on how hard you fight it.
        The Olympics were a Potemkin event covering up a multitude of sins. People with terminal cancer are being forced to work as are people with profound mental illness, or they will lose their meagre disability allowance. When the good folks in the government turn Scrooge here, they're very good at it. After all, they invented the concept.

        "We are monkeys with money and guns". Tom Waits

        by northsylvania on Fri Jan 04, 2013 at 03:48:10 PM PST

        [ Parent ]

      •  While I see your point... (1+ / 0-)
        Recommended by:
        Meteor Blades

        ...it's cold comfort for the person I know who has exhausted his unemployment benefits (the extension was only for people who have not already exhausted their benefits) and who is currently moving from sofa to sofa, with the hope that he won't be living on the street until the weather gets better. No assistance from the government except for food stamps. Applied for housing assistance but there's a four year waiting list, apparently, and anyway, families get priority.

        Or the couple I know whose hourly income (averaged between the two) went from $22.50 in 2007 to $8 (and one of them has a two-hour commute EACH WAY), and who now have to pay for their own health insurance, which takes roughly 1/3 of their monthly income... oh, and since they can't get it through an employer, they don't get a tax break on it either?

        Or the person who is on unemployment and is not making enough to afford health insurance, nor little enough to get Medicaid, and who is therefore not unlikely to lose the ability to walk by 2014?

        How many obligate homeless do you have in the UK? How many skilled people in their 50s making $8 an hour? How many people who are going to be permanently crippled for lack of health care?

        How many people in the UK over age 70 are trying to get by on less than $1000 a month? We have quite a few. Under $1700 a month? LOTS. That's about £1000.

        Even with your conservative austerity fuckishness, you're doing better at taking care of your most vulnerable citizens in basically every measurable way than we are.

  •  If you think of the FICA (16+ / 0-)

    holiday as stimulus,then it ending is a return to status quo not austerity. Similarly,taxes at the top don't strike me as austere. But then,I don't buy into the myth of high income earners as job creators,either.
    All that said,where are the JOBS? or proposals to stimulate economy to create them?

    "George RR Martin is not your bitch" ~~ Neil Gaiman

    by tardis10 on Fri Jan 04, 2013 at 01:12:10 PM PST

    •  Jobs? Nobody talks about Jobs. (7+ / 0-)

      That is soooo out of touch.

      See, if neither party pushes the topic -- instead focuses on debt and deficits -- then nobody has to figure a way to get them.

      Eventually, the jobs will come back, when the constant high unemployment here forces wages down to a level where we can compete with slave- and near-slave-labor effectively.

      On this Neo-libs and Cons are agreed. So please stop with this politically irrelevant "jobs jobs" stuff. Sheesh. You'd think lack of Jobs has something to do with the deficit and strains on the safety-net to hear some people tell it. The politically sophisticated know that nothing is connected to anything else.


      The Internet is just the tail of the Corporate Media dog.

      by Jim P on Fri Jan 04, 2013 at 01:53:37 PM PST

      [ Parent ]

  •  To me a better question is "will the U.S. . . . " (8+ / 0-)

    because they surely can't be done yet, even after March.  This is about the debt right?  Well, and the deficit but because the deficit contributes to the debt.  Nothing done now or in March will keep the national debt from rising.  I believe the estimates under Obama's and the repubs ten year plans have the national debt at 22-25 trillion within that ten years.  And they've barely made headweigh on the over 1 trillion per year deficit.  Now I agree it's all bullshit, but the political excuse of the debt and deficit for attacking social programs (they sure aren't going to attack the MIC and the Global Military Empire) is not going away, like forever.  So if the oligarchy's politicians continue with this debt and deficit game, there is a long way to go.

    "The Global War on Terror is a justification for U.S. Imperialism. It must be stopped."

    by BigAlinWashSt on Fri Jan 04, 2013 at 01:14:41 PM PST

  •  No, we didn't, this is apples and baseballs (10+ / 0-)

    Payroll tax cut - $125B of the $304B.  This was always a temporary stimulus tax cut, and one that Britain, France, etc. never implemented. Yes, going from +2 stimulus to zero is a subtraction of 2, but austerity in Britain, etc. is and has been more of going from zero to -2, a very different beast.  Moreover, I don't see how restoring social security's funding mechanism so that we DON'T cut social security benefits can be considered austerity.

    Obamacare taxes - $24B:  really??? we're going to call this an austerity measure?

    Income taxes on $400K & above - $27B:  really??? we're going to call this an austerity measure? When 98% of us are unaffected?

    $50B discretionary / $78B sequester cuts - $128B:  okay, this one I'll agree that the primary purpose is to cut spending and reduce the deficit, so it's fair to call this an austerity measure. I believe CBO scored these as about a 1 point drag on growth in 2013, but that the long run impact was positive. I suspect the CBO may be in error here, and that, like the IMF has recently shown with European austerity measures, these cuts will have a more negative effect than initially projected and won't necessarily lead to longer-term improvements.

    However, even here, a good chunk of this is coming from the military and even here in Hampton Roads where will feel the hurt, I am good with cutting back on military spending to allow room for spending or not cutting on other programs, so I would characterize this as good austerity, if you will.

    In the end, unemployment was extended, social security and Medicare/Medicaid preserved, many business tax breaks kept intact, etc. - these certainly were not austerity measures.  Moreover, there is the case that we have a much more growth oriented monetary policy than Europe.

    So, no, I say we have not implemented more austerity measures than Europe.  Not even close.

    Liberalism is trust of the people tempered by prudence. Conservatism is distrust of the people tempered by fear. ~William E. Gladstone, 1866

    by absdoggy on Fri Jan 04, 2013 at 01:17:13 PM PST

    •  agreed (4+ / 0-)

      -You want to change the system, run for office.

      by Deep Texan on Fri Jan 04, 2013 at 01:24:46 PM PST

      [ Parent ]

    •  Yes, it is ALL austerity (4+ / 0-)

      All tax increases and all spending cuts no matter where they are from or whether they were initially temporary or not count as austerity.   The only question is whether the particular cuts end up resulting in the 1.5 in GDP reduction to 1 in austerity that the IMF report tells us happened with the EU austerity, or if we get lucky(sarcasm) and it it closer to 1 to 1.

      The debt and deficit obsession is STUPID and CRUEL.  There are at least 25 million people unemployed or underemployed.  And, the IDIOTS and SOCIOPATHS in our government and the main stream media are arguing over how negative some numbers are in a computer and that we somehow don't have enough of those numbers in a computer to do something about the suffering of the the citizens of this country.

      There are reasons that taxes on the wealthy needed to be increased that have nothing to do with the deficit.  Upon increasing those taxes spending in excess of those increases should have also been passed in order to do something about JOBS.

      •  you are contradicting yourself (0+ / 0-)

        all tax increases count as austerity? but then you say there are reasons that taxes on the wealthy needed to be increased that have nothing to do with the deficit,  thereby contradicting yourself: if the taxes weren't raised as part of reducing the deficit, then the increase wasn't an austerity measure.

        Same for Obamacare taxes - how can you say this is anything to do with austerity, when it has to do with a new health care program?

        It does us no good to argue that the increase in taxes on the wealthy or the Obamacare taxes are austerity measures when the impetus for those taxes is funding spending that helps the very people whoare hurting.

        Liberalism is trust of the people tempered by prudence. Conservatism is distrust of the people tempered by fear. ~William E. Gladstone, 1866

        by absdoggy on Sat Jan 05, 2013 at 08:36:10 AM PST

        [ Parent ]

  •  The answer would seem to depend on what happens in (7+ / 0-)

    the rest of the fiscal cliff discussions on the debt-ceiling, seqeustration, and continuing budget resolution, as well as the next years of debt-ceilings crisis until we can regain the House, perhaps, after the 2020 Census leads to redrawing new congressional districts which will be our next chance to fix gerrymandering, if we should be in the position to do so.  Otherwise, 2030.

    Now that we've pegged tax revenues to 18% of GDP while the federal government spending is 23% of GDP, if we get no additional revenue and the House does not allow us to continue to let debt slide the answer to your question may be yes.

    And, we will have to unravel our New Deal, Great Society, ACA, and other progressive spending programs beyond anything Ronald Reagan, George Bush, or Grover Norquist ever believed would be possible.  Yes, it would be tragic, even catastrophic levels of austerity and human suffering.  

    On the other hand, if President Obama resists pressures to further cut spending down to these unsustainable levels and convinces the public top demand additional more progressive revenues equal to about 3% of GDP, lus get another 2% of deficit reduction from economic growth, inflation, and letting debt slide, using PCS or some changing the minds of House Republicans he will be a hero and we may do okay.

    The means is the ends in the process of becoming. - Mahatma Gandhi

    by HoundDog on Fri Jan 04, 2013 at 01:18:50 PM PST

    •  I wish I saw some indication that he (2+ / 0-)
      Recommended by:
      greenearth, divineorder

      wants to/will do this.

      On the other hand, if President Obama resists pressures to further cut spending down to these unsustainable levels and convinces the public to demand additional more progressive revenues equal to about 3% of GDP, lus get another 2% of deficit reduction from economic growth, inflation, and letting debt slide, using PCS or some changing the minds of House Republicans he will be a hero and we may do okay.
      It would seem out of character.



      Perpetual crisis means never having to say you're sorry.

      by chuckvw on Fri Jan 04, 2013 at 01:33:42 PM PST

      [ Parent ]

    •  NO NO NO (6+ / 0-)
      On the other hand, if President Obama resists pressures to further cut spending down to these unsustainable levels and convinces the public top demand additional more progressive revenues equal to about 3% of GDP, lus get another 2% of deficit reduction from economic growth, inflation, and letting debt slide, using PCS or some changing the minds of House Republicans he will be a hero and we may do okay.
      STOP ADVOCATING FOR AUSTERITY!!!  Getting 3% of GDP in additional revenue will increase the deficit as a percent of GDP.  It is impossible to get another 2% of deficit reduction from economic growth without either the private sector spending down net savings by 2% or the trade deficit decreasing by that much.  The latter of which would probably only happen in a severe recession which would likely cause more private sector savings thus reducing tax receipts and increasing the deficit.

      But, all of that is irrelevant. Screw the f-ing deficit.  I don't care about it and neither should you.  There are 25 million underemployed and unemployed we should be spending as much as it takes to put those people to work doing something productive.  Not talking about the virtue of suffering for some misguided notion of sound finance.

      •  Well, I see your point, your still optomistic we (0+ / 0-)

        can get more than 21% which I would be delighted to endorse

        So if I could change the comment I would say a minimum of 3% or more!  

        I wasn't trying to advocate 21% of GDP as an optimal or desirable level, but what appears to be a minimum level of mantaining entitlement spending and safety nets.  

        A level below which are are not just cutting but ending programs  like food stamps, Amtrak,  NSF, NIH, NFA, perhaps 50% or greater cuts to Mediciad, and way. way past things like chained CPI, increased Medicare eligibility age, means testing Social Security and Medicare at aggressive levels.  

        At 18% there are gone and I suspect most would agree that if this were the outcome Obama and Biden would go down in history as among the most reviled leaders in our history.  

        But, the exact numbers are subject to debate, my point being to go from our existing levels ( which I've read many different representation of but 23% of GDP seems like the best, but if a different calculation is better, fine,_ the point that using the consistent measures to the way this number is calculated the 18% of GDP level that the new taxes generate is way to low.  A 5% reduction of real GDP of spending or approximately a 22% reduction from current levels.  A complete disaster.

        And, the GOP says that the end of the revenue discussion and we have little to bargain with, except resolve not to agree to reductions.

        But, sequestration will automatically take out a trillion even if we face off the debt ceiling.

        So what are we going to do?  I don't see any of our leaders and very few here discussing it.

        The means is the ends in the process of becoming. - Mahatma Gandhi

        by HoundDog on Fri Jan 04, 2013 at 04:33:11 PM PST

        [ Parent ]

        •  We have already lost if we accept the premise (1+ / 0-)
          Recommended by:
          lostinamerica

          You are advocating that a deficit of 0% is desirable.  IT IS NOT!!! It enshrines chronic unemployment and the suffering of the unemployed for some bogus theory of sound finance.

          Here is the problem.  In terms of financial assets aka dollars.

          Government deficit + private sector net savings + trade deficit = 0

          So, using  percent of GDP.  If the private sector is deleveraging and net saving at approximately 3% of GDP and the trade deficit is approximately 2% of GDP then the government deficit must be 5% of GDP.  You might be shocked to learn that the government has little control over its deficit.

          So, to reduce the deficit as a percent of GDP, the combined private sector has to save less or the trade deficit has to go down.  Maybe raising taxes on the wealthy will extract some private sector net savings, but it will also reduce demand putting recessionary pressure on the economy and that might reduce the trade deficit.  On the other hand it will probably create more incentive to save because who is going to spend money in the face of a recession. I expect if we really try to balance the federal budget, we will have at least 50 million people out of work, deflation, bankruptcy, in the words of Yoda "...suffering.".  And, the budget deficit might be lower in dollar terms, but as a percent of GDP it will be much higher because GDP will have crashed.  Welcome to the Great Depression 2.

          I understand reality.  We have a bunch of sociopaths and idiots in Congress that don't give a damn about the suffering of anyone.  And, the few politicians that give a damn still worship at the altar of neo-liberal dogma.  And, the very few (if any) that realize that we should not be having a deficit debate at all might have to accept the lesser of bad deals.  But, we are not in Congress.  We do not have to accept the premise.  We have to educate ourselves and compatriots as to the harm that is being debated in Washington.  We have to harass our politicians as to the harm they are doing to the people of our nation.

          We need to be angry.  25 million people are unemployed or underemployed.  Their families and their children are suffering.  And, when we talk about deficits and reducing deficits what we are really talking about is making that number bigger.  We are talking about making millions more people suffer the same fate.  I cannot and will not suggest anything of the sort on a blog and I will try to educate as many commenters as I can to stop advocating for the suffering of their fellow Americans.

          I will keep e-mailing my Congress critters.  They may not care (F-ing Reichert) or it might not rise out of the clutter of other constituent e-mails, but maybe I will get lucky.  Maybe I can move the debate a little on DailyKos maybe not.

  •  I think that it is difficult (8+ / 0-)

    to compare US cuts and European nation cuts,  they started with larger social welfare programs and cut those fairly substantially, taking larger amounts from oridinary people than these cuts are aimed at.  In fact, much of the US problem of income inequality requires that we address tax rates at the top to solve in any way.   It is not so much the tax increases but the failure of spending on a limited number of social programs in the US that pay off big, unemployment benefits, SNAP,  and our long term neglect of infrastructure are hurting us more than raising taxes on the rich by increasing top rates, increasing capital gains taxes, increasing the medicare tax paid by them, etc.

    The payroll tax increase to what it has been for decades will provide a small loss in GDP growth.  But for political reasons and for returning the SS fund to its full earnings, it probably is the single best tax increase the middle class could pay.   Most Americans like a tax break,  most Americans prefer a secure SS fund to keeping 2% of their takehome pay.

    Our challenge on the payroll tax is to make sure there is unrelenting pressure on the politicians to leave Social Security alone in the short term while the teabagger crazies still hold seats in the House.

    •  One statement that you make... (4+ / 0-)
      Recommended by:
      Cassiodorus, chuckvw, triv33, greenearth

      ...is problematic for me...

      ...most Americans prefer a secure SS fund to keeping 2% of their takehome pay...
      Keeping the payroll tax cut in place, for a year more or even two, would ultimately have little effect upon the issue of whether or not SS remains "secure."

      It's a slippery slope--and one that we didn't need to go down, at least not this early in the horse-trading kabuki--that is currently playing out in D.C.

      "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

      by bobswern on Fri Jan 04, 2013 at 01:40:19 PM PST

      [ Parent ]

      •  and many liberals (7+ / 0-)

        argue the payroll tax should not have been lowered in the first place, tha more direct stimulus spending should have been put in place instead.  If one assumes one can have whatever one wants,  the right tax increases, the right tax decreases, the right stimulus package, the world is a wonderful place.

        But the 2% payroll tax cut was a compromise to keep taxes down when another stimulus bill tax expired, and extension of the stimulus couldn't get the votes.   Nothing in real life falls into place just as one would have it every time.  Leaving out the personalities and if better negotiating technique or more hard headedness would have worked,  chances are even the best technique couldn't get everything without some compromises.

        And since we already went down the road the payroll tax is back, we get to have real data, we can see what happens with a 2% working class tax increase.  Everything else is speculation, informed or educated guesses.  Time will tell.

      •  A $1,000 check from general revenue (4+ / 0-)

        Would have been far more stimulative and not touched SS in any way.



        Perpetual crisis means never having to say you're sorry.

        by chuckvw on Fri Jan 04, 2013 at 02:00:49 PM PST

        [ Parent ]

  •  I think it's a mistake to include the "holiday" (4+ / 0-)

    in the calculation. Medium to long term the funds should be paid back into the economy as benefits.

    Unless, of course, the Peterson cult gets its way...



    Perpetual crisis means never having to say you're sorry.

    by chuckvw on Fri Jan 04, 2013 at 01:37:43 PM PST

  •  Well, it's certainly not expansionary (3+ / 0-)
    Recommended by:
    bobswern, greenearth, divineorder

    I guess we really have to wait a bit to see exactly how much austerity ultimately comes out of the current multi-event clusterfuck but I believe that we can say with absolute certainty that there will be no spending for stimulus purposes.  It would have been so much more fulfilling for the long term unemployed to maybe see hope for employment than to have to sweat an extension of emergency benefits.
    The true tragedy is that unemployment in this country is very high as a topic of concern and very low as a priority.  Based on what transpired over the last week leads me to believe that there will be zero movement toward improving the employment picture.
    Don't believe it?  Today's jobs report is being heralded as another sign of "strength in the economy".....guess what; it sucked, plain and simple.  For the next 3 months all we're going to hear about are measures designed to depress GDP and worsen the jobs picture so what is currently a pathetic level of growth will likely start to fall off or stall.  We are ruled by idiots.

  •  Isn't Spain's big problem -- (3+ / 0-)
    Recommended by:
    bobswern, Aquarius40, greenearth

    the contraction of their housing market?  Now, the housing market contraction may start up again here, but last I heard it's stabilized a bit...

    "On the sidewalk the people are hustling and bustling/ They ain't got no time so they think on the thing/ That will fill in the space in between birth and death" -- Donovan Leitch

    by Cassiodorus on Fri Jan 04, 2013 at 01:52:31 PM PST

    •  This is ironic... (4+ / 0-)

      ...since we''ve heard this "housing recovery" meme concerning what's happening with that sector in other countries; while the public ignores nagging facts to the contrary. And, all the while this "man-made cycle" plays out, it's the 1% that benefits from housing speculation as they expand their extractive efforts (while sucking up bargain basement-priced housing) over the rentier class.

      "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

      by bobswern on Fri Jan 04, 2013 at 02:04:46 PM PST

      [ Parent ]

      •  P.S.... (4+ / 0-)

        ...I believe one of the bigger problems unique to Spain, as far as their recovery's concerned, is that their states (i.e.: provinces) have substantially more independence than most other countries. But, the reality is, to a far lesser extent, that problem DOES exist here in the U.S., as well

        "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

        by bobswern on Fri Jan 04, 2013 at 02:08:59 PM PST

        [ Parent ]

    •  What is missing is affordable housing appropriate (3+ / 0-)

      to a post-Climate Change world in terms of size, energy use and energy sources.

      With natural and other alternative building materials and methods, there's a whole market of housing in the $20-$150K range that doesn't exist except in the most blighted areas, primarily due to zoning regulations that  interfere with subdividing lots into lower cost units, and building codes, which don't accommodate alternative materials, methods and minimalist floorplans.

      The market for these homes exists because of 1) stagnating and declining wages and benefits, 2) some people already willing to adjust to the new Climate Change normal of a radically smaller carbon footprint, and 3) people who are making different lifestyle choices vis-a-vis careers, large houses, large mortgages, etc. i.e., there are more and more people seeing that less house, less mortgage means more career flexibility and better living.

      Shipping containers, staw bale, cob, rammed/poured earth, earthships, tiny homes on wheels (Tumbleweed/Fencl), small pre-fab and kit homes/cottages/cabins, domes, yurts, round homes... Lots of alternatives that are not options for most people in most places due to zoning and building codes.

      The Class, Terror and Climate Wars are indivisible and the short-term outcome will affect the planet for centuries. -WiA "When you triangulate everything, you can't even roll downhill..." - PhilJD

      by Words In Action on Fri Jan 04, 2013 at 02:23:21 PM PST

      [ Parent ]

  •  Omigod Firedoglake! (3+ / 0-)
    Recommended by:
    bobswern, priceman, divineorder

    Never mind what's being said.

    (Sorry, had to pre-empt that one.)

    "On the sidewalk the people are hustling and bustling/ They ain't got no time so they think on the thing/ That will fill in the space in between birth and death" -- Donovan Leitch

    by Cassiodorus on Fri Jan 04, 2013 at 01:55:57 PM PST

  •  Email from Tom Harkin (7+ / 0-)
    The so-called “fiscal cliff” has been averted -- but at what cost?

    At the last possible minute, the Senate and House passed legislation that fails to address what should be our most important priority -- supporting the middle class by creating jobs. It leaves the country in a position where we cannot generate the revenue necessary to meet our commitments to job training, to education, and other critical supports for the middle class.

    But perhaps worst of all, this deal makes tax breaks for high-income earners permanent while only extending tax relief for lower-income and middle-class Americans for five years -- locking in a tax system that is upside down and grossly unfair.

    Furthermore, every dollar that the wealthiest taxpayers save through this plan will become a potential cut to Social Security, Medicare, or Medicaid benefits. After all, House Republicans have been vocal about their intention to cut these programs before raising the debt limit in just a few months. It would be naive to consider this “cliff” deal without also considering its impact on those programs.

    Don’t get me wrong: I believe in compromise. But any compromise that permanently sets a new standard for the most fortunate among us while failing to fuel our economic engine -- a thriving middle class -- is something I cannot support.

    This is a delicate time for our recovering economy, and it cannot sustain further damage. This was the wrong deal for Iowa and the wrong deal for our country.

    While we didn’t get what we wanted, our stand did make an impact and kept this deal from favoring the wealthy over the middle class even more. That wouldn’t have happened without you joining me to take a stand and make your voice heard. Thank you.

    I will be in touch over the coming weeks as we look ahead to a new year and a new Congress. There is so much to do to keep fighting for the middle class, and I look forward to working with you in 2013.

    Best wishes for a happy New Year,

    Tom Harkin
    U.S. Senator



    Perpetual crisis means never having to say you're sorry.

    by chuckvw on Fri Jan 04, 2013 at 01:57:53 PM PST

  •  Thanks for the reference, bobswern (4+ / 0-)

    I think I referenced this partially in a small way not too long ago. David Cameron plans to seriously slash their government spending to where it is below ours in 2017 and ours is already much lower than theirs and many in the eurozone with a better safety net and the downward trajectory is huge, but it also shows how low the US bar is which pretty much stays a substandard standard of living for modern western industrial countries. The president recently said that bar was "too high" and focused in on Medicare again.

    The Fed is indeed quasi-public and not independent and doesn't operate anything without the Treasury; otherwise you would see the treasury worried about bond auctions but they don't. Stiglitz is the best New Keynesian and information asymmetry is a diagnosis with a lot of merit as to the problems of our banking system.

    Thanks again, bobswern.

    I don't negotiate grand bargains with deficit terrorists!

    by priceman on Fri Jan 04, 2013 at 02:30:25 PM PST

  •  The expiration of the payroll tax holiday (2+ / 0-)
    Recommended by:
    greenearth, divineorder

    is going to produce roughly twice as much revenue as the modest increase in income tax rates for the rich and super-rich will.

    Taking an additional 2% of income from the working and middle classes -- that have already seen their incomes decline some 8% over the course of this recession -- is an austerity measure, there's no way around it. Continuing to reduce the disposable income of the working and middle classes reduces demand which has a negative effect on the rest of the economy -- which should be obvious by now.

    The payroll tax holiday could have been extended or another means could have been found -- such as "Making Work Pay" -- to make up the shortfall in working and middle class disposable incomes due to the expiration of the payroll tax holiday, but it wasn't done, nor -- apparently -- was it considered more than momentarily.

    So. Over the next ten years, the working and middle classes will be paying an additional $1.2 trillion or so in taxes (and will have that much less disposable income) than they might otherwise. Thankfully, Our Betters will be paying somewhat less in additional taxes. We wouldn't want to put a crimp in their Job Creation after all.

    Blogging as Ché Pasa since 2007.

    by felix19 on Fri Jan 04, 2013 at 02:58:40 PM PST

  •  Oh God (0+ / 0-)

    I got about 100 words in.

    This guy is taking the repeal of the Bush tax rates on people making over $400k and calling it "austerity"

    I stopped reading there. I know a BS job coming when I see it.

    •  BS job is all the Whitehouse emails and (2+ / 0-)
      Recommended by:
      bobswern, lostinamerica

      press releases praising the shit sandwitch the middle class just got with the repealing of the payroll tax cut, thereby carrying the biggest burden,  instead of keeping campaign promise and standing strong on the S250,000 figure .

      Move Single Payer Forward? Join 18,000 Doctors of PNHP and 185,000 member National Nurses United

      by divineorder on Fri Jan 04, 2013 at 04:34:23 PM PST

      [ Parent ]

      •  That has been on the books for over two years (0+ / 0-)

        But today you are out of things to bash PBO over, so you haul up that decision, again, made over two years ago,

        Twaddle.

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