Congress to Obama: "The ATM is Closed"

[swansont]

Sure, but that's beside the point. Democrats said in 1941 that the economy would collapse if spending was cut, and it didn't. Where is Beck wrong?

 

Where did 1941 enter into the discussion?

[jackson33]

To clarify one point above, the double-dip is likely to happen, and is more a result of the previous stimulus being too weak and further how the previous stimulus is getting ready to wane and fall-off over the next few months. My point was not to imply that contraction would cause another town-turn, just that it would deepen and lengthen it unnecessarily. Hopefully this point is not lost on my more pedantic readers.[/Quote]

 

iNow, I'll use this single comment to illustrate my thoughts;

 

When you get right down to it, EVERYTHING needed to end or prolong economic progress has been conditional (Imposing or depending on or containing a condition) to Government actions, since the late 19th century, birth of MODERN* Capitalism. Reason; An investor based society, can be influenced by those actions.

 

From here and to simplify into one word, the two basic approaches have been Keynesian (Of or relating to John Maynard Keynes or to his economic theories) basically government control over a recovery or Friedman's approach to encourage the markets (Capitalism/Investor) control, which in fact are the engines of any economy (my opinion). They both agree in principle that an over heated economy (causing inflation) can be controlled with taxation. The principle here being a 1% increase in Taxes to GDP will decrease that GDP about 3%, over time being settled on that 18-19% of taxation, will produce the optimum economical performance (IMO, arguable since Local/State Taxes today have a greater influence, than before 1950).

 

What your saying, some (not all) in the Administration (Romer, advocates), Krugman and those that truly believe an economy is controllable via government (opposed to investors) is that if we were to stop borrowing money to stimulate a three year downturn, will only increase the time of the recession or create a serious deflationary period (depression). I really don't think you understand the inevitable impacts of passed and/or proposed legislation or the resulting REQUIREMENT for additional taxation (to cover the additional obligations) will and has had on the world's investors, much less those in the US.

 

If you recall, before the HCB and much of this closed door enactment of legislation, I didn't feel like we were going to have a doubled dip in the Equity Markets (not the same as an economical, since it has yet to recover anything). At the time and remaining optimistic here, the elections or the perception of an outcome (positive to the investor) will keep those Equity Markets near or what they are today, while the economy/employment may in fact continue level to today or slightly down over the next few months.

 

*Since, I know you like to dissect any argument to some single point, yes Capitalism or free markets had been around much earlier, however Government involvement (Central Banks Etc) had not been much of an influence and free market economies, increased and decreased primarily from investment/consumer participation and could and did fluctuate a great deal (trends being in months to a year or so).

 

Wouldn't a lack of confidence in the ability of the US to pay back debts look a lot more like investors scrambling to sell billions of dollars they had invested as dollars, causing massive hyperinflation, etc? I mean, that's what I would do, not just charge double the interest rate or something silly like that. [/Quote]

 

 

Skeptic; Not all US debt is dependent on foreign investment. Money Markets (T-Bond) rates are THE SAFE HAVEN for American and others investors around the World for there money, those rates hitting all time lows last week, under 3%. We all know about the Euro, Greece, Spain and Italy, so few are interested in the Euro, China/Russia and India are not drawing the investments they were and Japan's money, really took a hit last week.

 

There's no place to go other than Precious metals, which are already over priced, IMO. (I hold silver bullion and believe it's currently the best safe haven, the poor mans gold).

 

As for the Trade Deficits or foreign investments in the US and long term T-Bonds, the interest rates are dictated by demand. If confidence declines, those rates will simply go up, but it's always going to be dependent on other monetary values. Where confidence comes in, is when the investor class or the consumer, will stray from safety and spend/invest (much higher rate of return), which has been the missing link in today's economical picture, there is very little.

[Pangloss]

Where did 1941 enter into the discussion?

 

Pardon me, 1946.

[swansont]

Pardon me, 1946.

 

OK, well the main differences were that we were a much larger manufacturing economy then (percentage-wise), with a number of jobs that were going to open up as "Rosie the riveter" returned home and manufacturing returned to peacetime pursuits, with pent-up demand from four years of reduced/non-consumption. Add to that the fact that the manufacturing capacity in the other countries involved with the war had been heavily damaged, so we were the dominant outlet for manufactured goods for a period of time. We have no such conditions today; consumer production runs in parallel with military production and is on a global scale, and we have actual people out of work, rather than just the prospect of people being out of work as they are removed from military service.

 

I don't know what the actual arguments were in 1945/46, but I'd guess a major concern was how fast the ex-soldiers would be absorbed into the workforce. But there was one thing present then that helped, the GI bill, which helped cushion employment problems

 

In the peak year of 1947, veterans accounted for 49 percent of college admissions. By the time the original GI Bill ended on July 25, 1956, 7.8 million of 16 million World War II veterans had participated in an education or training program.

 

http://www.gibill.va.gov/gi_bill_info/history.htm

 

While we still have the GI bill, we don't have nearly the same fraction of the unemployed (or potentially unemployed) who are eligible for the benefits.

 

Beck is wrong because while the numbers are similar, the circumstances aren't.

[Pangloss]

Well those are interesting points, but they weren't predicted by Democrats in 1946, now were they? What hindsight will be 20/20 ten years from now? So I guess we can't actually say that Beck is wrong, just that the conditions are different, yes? But I agree with you that we can't assume he's right either, which of course Beck would insist. So I guess that much is clearly wrong.

[ParanoiA]

Oh please, the circumstances never match. Ever. The dynamics of our economy and infrastructure constantly evolve and change and always provide opportunity for exception and resemblance. For every point one associates resemblance, I can rebut with an exception. That's economics, and that's why it's barely predictable and full of surprises.

 

I'm tired of my money being treated as an experiment in debt juggling by bureaucrats. I don't really give a crap about their intellectualized excuses to continue spending and spending, like self-impoverished american brats that won't discipline themselves and show some responsible behavior with property that isn't their's to begin with.

 

I have no reason to believe that somehow, in the future, suddenly we won't have any exigencies to spend money on and we can balance our budget. We're always going to see some catastrophe that needs money thrown at it; that needs to be used as an excuse to continue borrowing and spending; to be the excuse for irresponsible politicians that play with our money like it's a monopoly game.

 

Give us back our money. We can spend it every bit as immaturely as these shiny shoed political hacks in Washington and we'll actually get a piece of happiness out of it...maybe.

[swansont]

Well those are interesting points, but they weren't predicted by Democrats in 1946, now were they? What hindsight will be 20/20 ten years from now? So I guess we can't actually say that Beck is wrong, just that the conditions are different, yes? But I agree with you that we can't assume he's right either, which of course Beck would insist. So I guess that much is clearly wrong.

 

If Beck is using 1946 as a justification, then he is wrong, since the same conditions are not present. "Wrong" here means that his thought process is invalid, not that the ultimate conclusion is at odds with reality; this is what we used to call "answer by accident" when I was teaching. You get no points for the proper answer arrived at by invalid reasoning; it shows no understanding of the material.

---

Merged post follows:

Consecutive posts merged

Give us back our money. We can spend it every bit as immaturely as these shiny shoed political hacks in Washington and we'll actually get a piece of happiness out of it...maybe.

 

I disagree insofar as not everyone would spend money if they were given some.

 

And also that it's your money, if for no other reason that this was deficit spending. Not one thin dime of money you have paid in taxes was involved.

[ParanoiA]

I disagree insofar as not everyone would spend money if they were given some.

 

And also that it's your money' date=' if for no other reason that this was deficit spending. Not one thin dime of money you have paid in taxes was involved.[/quote']

 

Not one thin dime of that money was theirs either. And my taxes, as well as my children's taxes, and probably their children's taxes, are precisely what's at stake with these money games. Who pays for it when their experiments with disaster fails? It also does damage to the dollar - the tax nobody likes to talk about. And guess what? It effects the poor the most.

 

Honestly, it's a bit like saying I didn't use my money when I paid my electric bill with a post dated check. The money will eventually come from the people, mostly in the form of taxes. And since our government is not supposed to be in the private sector running businesses and competing with private citizens that can't print money and afford to lose money indefinitely, then it shouldn't come from profits either.

 

This is an example of why states should be able to secede. So that somebody on this turf can actually determine their own sane destiny instead of being bullied around by this centralized power trip of a federal empire.

 

I'm so done with american's bullshit. Land of the free and home of the brave is in Europe somewhere. They're more free than we are. We're a joke, and we're the only ones that don't get the punch line.

[Pangloss]

If Beck is using 1946 as a justification, then he is wrong, since the same conditions are not present. "Wrong" here means that his thought process is invalid, not that the ultimate conclusion is at odds with reality; this is what we used to call "answer by accident" when I was teaching. You get no points for the proper answer arrived at by invalid reasoning; it shows no understanding of the material.

 

All economic advice, however expert, is based on analysis of previous conditions that are never quite the same as current conditions. Do we have any means by which to measure the degree of similarity between two comparisons? If not then what you seem to be confirming here is that Beck's analysis is as valid as Krugman's.

[jackson33]

swansont; The National Debt today is 13.1T$, the GDP as predicted by FY end 2010, is around 14.5T$ (14.2T$ in 2009), giving this year a 90% D to GDP ratio. Keeping in mind today, not including the HCB, the obligations coming from it, the increased Federal Government required to implement, enforce and maintain, the taking over of the School Loan Programs, from the private sector and the potential obligations coming from that or anything else that does not produce the expected returns for the expenses (remaining/unspent 2010 Stimulus, GM or other issues like BP). In addition in 2009 the Trade Deficits was over a half trillion (Export 1.057T$, Import 1.558T$), most certainly to grow with high oil cost and lack of interest in new drilling in the US. We have nearly 50% of American Households already receiving Federal Checks each month and expecting an increase in the number as the 'Boomers, start retiring next year.

 

I beg you, explain to me where these statistics are in any way, more favorable for additional spending than the Depressions of the 1893, the 1930's or even 1978-1982 recession. Yes, the political and social structure were different, but it was that difference that could and did withstand an error in judgement and the following consequences, if the Friedman philosophy is correct...

 

 

Yet another example, as it was in 1920, 1946, 1960, 1982, 1990, 2003 when finally the correct actions were taken IMO.

 

 

The depression was a major issue in the debates over Bimetallism. The Republicans blamed the Democrats and scored a landslide victory in the 1894 state and Congressional elections. The Populists lost most of their strength and had to support the Democrats in 1896. The presidential election of 1896 was fought on economic issues and was marked by a decisive victory of the pro-gold, high-tariff Republicans led by William McKinley over pro-silver William Jennings Bryan.[/Quote]

 

http://en.wikipedia.org/wiki/Depression_of_1893

 

 

 

My fear and believe me it's not for myself, is that the Republicans whether it's the Party or the general US Population, is not capable or willing to make the extreme changes needed, this time...A 14-15T$ economy is not going to increase, anywhere near what's needed to facilitate the pending obligations and those obligations are growing.

[iNow]

http://www.nytimes.com/2010/07/02/opinion/02krugman.html

For the last few months, I and others have watched, with amazement and horror, the emergence of a consensus in policy circles in favor of immediate fiscal austerity. That is, somehow it has become conventional wisdom that now is the time to slash spending, despite the fact that the world’s major economies remain deeply depressed.

 

This conventional wisdom isn’t based on either evidence or careful analysis. Instead, it rests on what we might charitably call sheer speculation, and less charitably call figments of the policy elite’s imagination — specifically, on belief in what I’ve come to think of as the invisible bond vigilante and the confidence fairy.

 

Bond vigilantes are investors who pull the plug on governments they perceive as unable or unwilling to pay their debts. Now there’s no question that countries can suffer crises of confidence (see Greece, debt of). But what the advocates of austerity claim is that (a) the bond vigilantes are about to attack America, and (b) spending anything more on stimulus will set them off.

 

What reason do we have to believe that any of this is true? Yes, America has long-run budget problems, but what we do on stimulus over the next couple of years has almost no bearing on our ability to deal with these long-run problems.

 

<...>

 

What’s the evidence for the belief that fiscal contraction is actually expansionary, because it improves confidence? (By the way, this is precisely the doctrine expounded by Herbert Hoover in 1932.) Well, there have been historical cases of spending cuts and tax increases followed by economic growth. But as far as I can tell, every one of those examples proves, on closer examination, to be a case in which the negative effects of austerity were offset by other factors, factors not likely to be relevant today. For example, Ireland’s era of austerity-with-growth in the 1980s depended on a drastic move from trade deficit to trade surplus, which isn’t a strategy everyone can pursue at the same time.

 

And current examples of austerity are anything but encouraging. Ireland has been a good soldier in this crisis, grimly implementing savage spending cuts. Its reward has been a Depression-level slump — and financial markets continue to treat it as a serious default risk. Other good soldiers, like Latvia and Estonia, have done even worse — and all three nations have, believe it or not, had worse slumps in output and employment than Iceland, which was forced by the sheer scale of its financial crisis to adopt less orthodox policies.

 

So the next time you hear serious-sounding people explaining the need for fiscal austerity, try to parse their argument. Almost surely, you’ll discover that what sounds like hardheaded realism actually rests on a foundation of fantasy, on the belief that invisible vigilantes will punish us if we’re bad and the confidence fairy will reward us if we’re good. And real-world policy — policy that will blight the lives of millions of working families — is being built on that foundation.

[swansont]

All economic advice, however expert, is based on analysis of previous conditions that are never quite the same as current conditions. Do we have any means by which to measure the degree of similarity between two comparisons? If not then what you seem to be confirming here is that Beck's analysis is as valid as Krugman's.

 

All I have of Beck's analysis is your summary of it, and all I've concluded is that it's not valid. I haven't really looked at Krugman's analysis. The only way for the two to be "equally valid" is if Krugman's analysis is also invalid.

 

However, without having investigated the matter at all, I would predict the probability that they are equally valid is probably small; I'd take the analysis of an actual professor of Economics and a Nobel Prize-winner over someone who, as far as I can tell, has no training in economics whatsoever (not even a college course).

 

Edit to add: The snippet iNow quoted seems to be saying the same thing — you can't assume something will work just because it worked before, because the conditions have changed. The austerity push is not the result of careful economic analysis.

Edited July 2, 2010 by swansont

[ParanoiA]

So, is Krugman a member of SFN now or what? Just wondering why I keep seeing Krugman's posts...

[Pangloss]

The austerity push is not the result of careful economic analysis.

 

... in Krugman's opinion. In fact quite a lot of economic advice has been given to the G-20 leaders, every single one of whom aside from the American president has decided that that advice is sounder than that of Krugman.

 

You didn't address the point I raised that all economic analysis is based on interpretation of historic facts that never meet current conditions. All you're doing here is falling for iNow's supposition that Paul Krugman's opinion meets the same test of logic as any analysis of Physics or Chemistry or any of the other hard sciences.

 

No evidence has been offered for this claim that we may now treat economics as one of the hard sciences, aside from statements from Paul Krugman, who refuses to acknowledge that a second branch of economics with a different opinion from his exists and regularly wins Nobel Prizes as well. Further, Krugman's political bias is evident from historical data (his opinion pieces in the New York Times).

[iNow]

You didn't address the point I raised that all economic analysis is based on interpretation of historic facts that never meet current conditions. All you're doing here is falling for iNow's supposition that Paul Krugman's opinion meets the same test of logic as any analysis of Physics or Chemistry or any of the other hard sciences.

 

No evidence has been offered for this claim that we may now treat economics as one of the hard sciences, aside from statements from Paul Krugman, who refuses to acknowledge that a second branch of economics with a different opinion from his exists and regularly wins Nobel Prizes as well.

 

 

http://krugman.blogs.nytimes.com/2009/04/06/one-more-time/

...if consumers have perfect foresight, live forever, have perfect access to capital markets, etc., then they will take into account the expected future burden of taxes to pay for government spending. If the government introduces a new program that will spend $100 billion a year forever, then taxes must ultimately go up by the present-value equivalent of $100 billion forever. Assume that consumers want to reduce consumption by the same amount every year to offset this tax burden; then consumer spending will fall by $100 billion per year to compensate, wiping out any expansionary effect of the government spending.

 

But suppose that the increase in government spending is temporary, not permanent — that it will increase spending by $100 billion per year for only 1 or 2 years, not forever. This clearly implies a lower future tax burden than $100 billion a year forever, and therefore implies a fall in consumer spending of less than $100 billion per year. So the spending program IS expansionary in this case, EVEN IF you have full Ricardian equivalence.

 

Is that explanation clear enough to get through? Is there anybody out there?

[swansont]

(The austerity push is not the result of careful economic analysis.)

 

... in Krugman's opinion.

 

Yes. If you had left the entire quote intact, you would see that that was what I said. That is Krugman's view, and in regards to Beck's analysis, mine as well.

 

In fact quite a lot of economic advice has been given to the G-20 leaders, every single one of whom aside from the American president has decided that that advice is sounder than that of Krugman.

 

You didn't address the point I raised that all economic analysis is based on interpretation of historic facts that never meet current conditions. All you're doing here is falling for iNow's supposition that Paul Krugman's opinion meets the same test of logic as any analysis of Physics or Chemistry or any of the other hard sciences.

 

I have no current intention of addressing that point, since I am not advancing the opinion that economics is a hard science. I have said nothing to defend Krugman, other than note that from the little I read, that we made the same point about drawing the conclusion that "because it worked before it will work again" is flawed, when applied to different conditions. And I only mentioned Krugman because you brought the subject up.

 

To summarize: From the short summary you gave, I think Beck was in error because his analysis was overly simplistic and invalid.

 

Both you and jackson33 appear to have assumed that you know what my position is on this, and have challenged me to defend it. And I can't see what I've said that would allow you to draw that conclusion. It would be erroneous to assume that because I disagree with the validity of Beck's analysis that I disagree with the conclusions. It would also be erroneous to conclude the opposite.

[Cap'n Refsmmat]

http://www.nytimes.com/2010/07/02/opinion/02krugman.html

For the last few months, I and others have watched, with amazement and horror, the emergence of a consensus in policy circles in favor of immediate fiscal austerity. That is, somehow it has become conventional wisdom that now is the time to slash spending, despite the fact that the world’s major economies remain deeply depressed.

Has anyone in the government announced this as their intention? I haven't heard anything about austerity from the administration, only intentions to enforce PAYGO. Hardly "austerity."

 

This conventional wisdom isn’t based on either evidence or careful analysis. Instead, it rests on what we might charitably call sheer speculation, and less charitably call figments of the policy elite’s imagination

Well, we are talking about economics.

[Pangloss]

Yes. If you had left the entire quote intact, you would see that that was what I said. That is Krugman's view, and in regards to Beck's analysis, mine as well.

 

Okay. I responded in that way because it seemed in that post that you had added that addendum ("The austerity push is not the result of careful economic analysis.") as a statement of opinion; hence my reply. I guess I misunderstood.

 

 

To summarize: From the short summary you gave, I think Beck was in error because his analysis was overly simplistic and invalid.

 

And choosing not to respond to the point raised that all economic analysis is soft, historic, and based on simplified comparative analysis. Got it.

 

 

Both you and jackson33 appear to have assumed that you know what my position is on this, and have challenged me to defend it. And I can't see what I've said that would allow you to draw that conclusion. It would be erroneous to assume that because I disagree with the validity of Beck's analysis that I disagree with the conclusions. It would also be erroneous to conclude the opposite.

 

Just speaking for myself, I don't assume I know your opinion, I simply respond to post content. Since I myself frequently play The Devil's Advocate, I can hardly require others to set theirs down in stone.

[swansont]

And choosing not to respond to the point raised that all economic analysis is soft, historic, and based on simplified comparative analysis. Got it.

 

As I have only been exposed to a smattering of economic analysis, to respond to that point would require knowledge I do not possess. And really have no desire to acquire.

[iNow]

I haven't heard anything about austerity from the administration,

You should note that you've just argued from incredulity.

 

 

http://www.economist.com/node/16485318?story_id=16485318&source=hptextfeature

Though they left themselves wiggle room, the change of tone was clear. Thanks to Greece’s sovereign-debt crisis, which has terrified politicians, stimulus is out and deficit reduction is in.

 

The trend has been most noticeable in Europe, where every big economy has spelled out spending cuts or tax increases in recent weeks. But it is evident everywhere. Japan’s new prime minister, Naoto Kan, has pushed a debate about raising the consumption tax to the top of the campaign for the upper house of parliament. In America, Congress’s fears about the deficit have thwarted the Obama administration’s efforts to pass a new mini-stimulus.

 

Until recently the deficit-cutting rhetoric exaggerated its likely short-term impact. Germany has long been one of the loudest proponents of the need for austerity. But its near-term plans (tightening worth 0.4% of GDP in 2011) are modest. Spain was the only big European economy forced by financial markets into immediate, tough austerity. Yet now Britain has chosen that route, with a budget that promises tightening worth 2% of GDP in 2011. The expiration of America’s stimulus implies a fiscal tightening of some 1.3% of GDP in 2011, a figure which could rise considerably if Congress prevented the extension of George Bush’s tax cuts. Much could change, but for now the rich world looks set for a collective fiscal adjustment worth around 1% of its combined GDP next year, the biggest synchronised budget contraction in at least four decades.

 

<...>

 

The advocates of austerity exaggerate more dangerously still. They base their argument on cases in the 1990s, when countries such as Canada to Sweden cut their deficits and boomed. But in most of these instances interest rates fell sharply or the country’s currency weakened. Those remedies are not available now: interest rates are already low and rich-country currencies cannot all depreciate at once. Without those cushions, fiscal austerity is not likely to boost growth.

 

<...>

 

In America the new deficit-focused climate is preventing politicians from passing a temporary (and sensible) fiscal stimulus package without inducing them to tackle the sources of the country’s huge medium-term deficit by, for instance, reforming social security. The result probably won’t be another Hooveresque Depression. But it could be a recovery that is weaker and slower than it should have been.

 

 

There's also this:

http://www.economist.com/node/16486549

 

 

Now, you have no further excuse to be incredulous and continue arguing in that manner. You're welcome.

 

 

 

Well, we are talking about economics.

 

Care to elaborate? Economics is a field based on the principles of science and empiricism. Do you really think an appeal to ridicule such as that you've put forth above is sufficient to negate the validity of the conclusions drawn from established and tested principles?

[Cap'n Refsmmat]

"Austerity" implies an economy that cuts pensions, cuts public spending, raises taxes, and cuts public services. It implies an ascetic government. Refusal to pass a stimulus does not mean austerity.

 

Now, if someone attacked "the sources of the country’s huge medium-term deficit by, for instance, reforming social security," as the Economist suggests, that would be austerity.

[iNow]

So, basically your only argument is to try changing the definition of austerity into something different than that used by economists. Got it.

 

 

 

http://en.wikipedia.org/wiki/Austerity

In economics, austerity is when a government reduces its spending and/or increases user fees and taxes to pay back creditors.

 

 

 

 

http://globalresearch.ca/index.php?context=va&aid=19843

When your doctor tells you that "This will only hurt a bit," you know enough to brace yourself for a painful procedure. When your boss tells you he has an exciting new project for you to work on, you know you're about to get saddled with the job that no one else wants to do. When a salesman tells you a used car is a fixer-upper, you know you're looking at a lemon.

 

Similarly, when the IMF tells a nation that they need to implement "austerity" in order toget themselves out of a financial crisis, here, too, lies a gaping chasm between the language and the reality.

 

"Austerity" is one of those Orwellian terms that has been injected into our political discourse precisely because it is a nice-sounding word for a very painful reality. "Austerity" implies discipline, self-restraint, even nobility. "Austerity" is prudent. "Austerity" is modest. "Austerity" is a virtue. It is an end in itself.

 

If the IMF or the European Central Bank come to the people of a collapsing European nation and tell them to sacrifice their pensions and their savings and their very standard of living all for a debt that their government has fraudulently racked up in their name, no one would go for it, and rightly so.

 

But tell those same people that they need to implement "austerity measures" in order to "get back on their feet" economically, and many will be willing to live in the harshest of conditions, content to put up with the dismantling of their nation itself in the vain hope that by giving more power to the international financial institutions they can somehow avoid economic collapse.

 

The trick, of course, is that reality is completely the opposite. Like the doctor giving you false assurances that this will only hurt a bit, the economic amputation that the bankers have in store for the once-proud nations of the industrialized world will be excruciating.

 

Just ask anyone in the third world. They should know. They've been going through these "austerity" plans for decades.

 

<...>

 

The first step is to nurture the understanding that the "austerity" offered by the banksters is not the solution to our problems, but the beginning of them.

Edited July 5, 2010 by iNow

[Cap'n Refsmmat]

Uhm, no. Most economists (and The Economist) consider "austerity" to be deficit-cutting measures:

 

The advocates of austerity exaggerate more dangerously still. They base their argument on cases in the 1990s, when countries such as Canada to Sweden cut their deficits and boomed.

At their most recent gathering, in Toronto on June 26th-27th, the club’s rich-world members pledged “at least” to halve their deficits by 2013. Though they left themselves wiggle room, the change of tone was clear. Thanks to Greece’s sovereign-debt crisis, which has terrified politicians, stimulus is out and deficit reduction is in.

 

That is not the same thing as not passing more stimulus.

[iNow]

That is not the same thing as not passing more stimulus.

 

I don't understand your point. It's as if you're arguing that it's not a sign of austerity to avoid passing further stimulus when such stimulus is badly needed. Is that what you're trying to say? Can you please clarify your position?

[Cap'n Refsmmat]

That is indeed what I'm trying to say. "Austerity" would imply radical government programs to cut spending and decrease the deficit. Austerity measures in the United Kingdom have involved laying off thousands of public-sector employees, cutting government pensions, killing off wasteful government programs, freezing employee salaries, and forcing government ministers to fly coach class.

 

So far, no such thing has happened in the US. There has not yet been a concerted effort to decrease the deficit, nor has public spending been significantly decreased. Government jobs are safe for the moment. What has happened is a Congressional refusal to fund a new spending program.

 

Austerity implies (by definition) "austere" and "ascetic" living conditions, with few frills or benefits. It implies massive spending cuts.