Lesson From Europe: 'Savage Austerity' Won't Help
Paul Krugman: Portugal, Ireland, UK learned the hard way
By Matt Cantor, Newser User
Posted Mar 25, 2011 1:28 PM CDT
President Obama listens to a cultural performance with Speaker of the House John Boehner during a St. Patrick's Day lunch, March 17, 2011.   (Getty Images/AFP PHOTO/Jim WATSON)

(Newser) – Just a few years ago, global leaders knew they had to focus on job creation before they tackled deficits. But that strategy “has been abandoned in the face of phantom risks and delusional hopes,” writes Paul Krugman in the New York Times. Now, it’s all about reducing the deficit through austerity—even though that idea has failed Portugal, Ireland, and Great Britain. To calm markets, a struggling Ireland imposed “savage austerity measures on ordinary citizens”—and America’s deficit hawks applauded.

“Since then,” however, “the interest rate on Irish debt has doubled,” and the country’s jobless rate is at 13.5%. Britain, meanwhile, made cuts on the assumption that “private spending would more than make up for the government’s pullback.” Now, UK economic growth “has stalled, and the government has marked up its deficit projections as a result.” Instead of an “austerity delusion,” we need a “serious fiscal plan”—one that would fix long-term problems like health care costs and probably raise taxes. But in today’s political climate, such ideas don’t fly.

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Showing 3 of 56 comments
boxcar
Mar 26, 2011 4:25 PM CDT
Its time to face the facts of life- US is competing with China SLAVE LABOR where ratio of US wages to China wages is 40 to 1. How do I know this? Asked a man who'D lost his job to a Chinaman- Wnen our town lost the PRESTO factory to China, he was a foreman making $14/hr- When he trained the Chinese foreman to take his job he asked that fellow what his wage was- Now, are you ready for this? Can you believe $14 a W E E K ? So next time you buy a WalMart item, read the label- "Made in China" but "by SLAVES is left off, isn't it? So lets all buy "Made in USA" items The JOB you save, may be your own- D U H Also, stop fornicating willy nilly- 2 kids is enuff
odowd80
Mar 26, 2011 7:10 AM CDT
Today's conservatives should not be referred to as "deficit hawks." What a joke, these guys are too scared to call for any substatial cuts as we've seen in Washington with the never-ending stream of 2-week budgets.
xtfrm
Mar 26, 2011 5:47 AM CDT
Hey, politicians - raise taxes on all Americans, especially the coddled top 2% and cut the bloated, insane defense budget. You proved how little you care about the deficit when you got together and extended Bush's idiotic tax cuts. That alone should have seen you all lose your jobs. The answer isn't to chip away at social programs. That's a losing gambit as you'll likely find out.