After going nearly four years without producing a budget resolution, Senate Democrats today released a plan confirming their mantra about “balanced” approaches has nothing to do with actually balancing the budget. In their view, “balance” is a mix of higher taxes and higher spending, chronic deficits and debt, and a …
Over the past few days, new strikes and riots have convulsed Greece and Spain. Conventional wisdom (including from economist Paul Krugman) suggests that cuts in government spending—often described as “austerity”—are a primary cause of the economic downturn in these nations and across much of Europe. This “demand deficiency” hypothesis leads …
Francois Hollande won election to the French presidency by promising that more government spending would lead to quick economic growth. He sharply criticized the “austerity”—i.e., sudden spending cuts—proposed by his opponent. A few months later, Hollande has come full circle. In addition to a tax increase that has wealthy French …
Harvard economist Larry Summers claims in The Washington Post that aggressive fiscal austerity in the U.K. is the primary cause of its continued economic stagnation. But the former Obama advisor understates both the necessity for a credible British fiscal plan in 2010 and the structural factors that have been a …
Numerous governments across Europe have embarked on strict austerity programs. Europe is also sliding into a deep recession, with some countries already essentially in deep depression. Are the two phenomena related? Is the austerity exacerbating the economic downturn? Yes and no, and the yes should be no surprise. For context, …
We’ve corrected Paul Krugman in the past, when he mistakenly invoked imaginary British spending cuts as proof that undercutting Keynesian hydraulics will demolish an already limp economic recovery. This time he points to Greek austerity – or “spending cuts” – as he characterizes it. “Not a day goes by without …
Some prominent left-wing commentators have devoted weekly columns and blogs to the notion that Great Britain has misguidedly pursued harsh spending “austerity” and that doing so has left the country lingering in unnecessary anguish. In the opinion pages of The New York Times, Paul Krugman inveighs that: Britain, in particular, …
The left continues to resist any suggestion of spending cuts right now. In their view, a depressed economy is no time to slash spending; that would only further weaken demand. The successful austerity policies adopted in response to the downturn of 1920, however, offer a clear rebuttal to this notion. …
Evidence shows that “austerity” during a sharp downturn in 1920 coincided with quick economic recovery and robust growth throughout the rest of the decade. Nevertheless, there is a belief that the example of President Herbert Hoover from 1929–1933 was a failure of austerity, which pushed the economy into the Great …
Remember the Great Depression of the 1920s? If not, that’s because it didn’t happen. The recession of the early ‘20s quickly ended after spending and taxes were cut dramatically. It provides a clear lesson in “austerity” that President Obama should heed. In 1920, newly elected President Warren Harding inherited a …
