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  • austerity

    Fed Nominee Brainard Needs Nuance on Austerity

    In her hearing before the Senate today, Federal Reserve Board nominee Lael Brainard reportedly said that “expansionary austerity is a contradiction and does not work.” This one-dimensional view of a complex set of policies ignores extensive academic research and lacks the nuance we expect from those who serve on the … More

    Paul Krugman: Selective Data Usage

    Paul Krugman, in the words of a former New York Times public editor, “has the disturbing habit of shaping, slicing and selectively citing numbers.” Most recently, he selectively cited numbers about austerity in Europe, hoping to redefine the policies that made the German economy so buoyant. Germany is worth paying … More

    Obama's Austerity Myth

    The Obama administration put out the word this weekend that the president’s new budget will end several years of “austerity” in Washington. Come again? Austerity? Since 2009, federal borrowing has skyrocketed by $6 trillion. This year’s budget deficit is expected to fall to somewhere near $500 billion, which sadly is … More

    Tax Increases Really Hurt Growth and Jobs

    Some lawmakers, led by Senate Budget Committee chair Patty Murray (D–WA), are seeking to raise taxes in the budget conference to replace the modest spending reductions referred to as sequestration. They say that spending cuts hurt growth and jobs. If they are truly concerned about the economy and Americans’ opportunities, … More

    Look Closer: Tax Increases, Not Spending Cuts, Are the Harmful Austerity

    Proponents of government spending want to use the recent history of Europe as evidence that spending cuts are harmful, but their arguments lose traction when one looks closely at the data. One example comes from Paul Krugman, who used the International Monetary Fund’s Fiscal Monitor data to argue that “austerity … More

    Plan to Suspend Debt Limit Means Debt Would Rise to $17.8 Trillion

    Treasury Secretary Jack Lew announced a new debt ceiling deadline today, urging congressional lawmakers and the President to come to an agreement concerning the nation’s borrowing authority by October 17. Republicans are proposing a $1.1 trillion increase in the debt limit by suspending the cap through December 2014. The big … More

    Moody's: Further Deficit Reduction Needed to Maintain Stable Outlook

    Moody’s changed the outlook on the U.S. credit rating from negative to stable this week, citing improving deficits. While this is good news, policymakers should curb their enthusiasm about what this means for the U.S. debt situation. The improvement could be fleeting, as Moody’s relies heavily on favorable economic growth … More

    Greece: Austerity Doesn’t Involve Public-Sector Layoffs

    Slate’s Matthew Yglesias might be attacked as an “austerity denier” now that he has joined Heritage’s Salim Furth in pointing out that there is a lot of policy diversity under the broad label of “austerity.” Yglesias explained last week why a small but sudden layoff of government employees might bring … More

    Will the Currency Zombie Eat the Trans-Pacific Partnership?

    Currency manipulation is the issue that never dies. No matter how many times the link between exchange rates and American jobs is shown to be tenuous, the matter rises again like a zombie. In this case, it is Japan that has brought exchange rates back into the spotlight, as the … More

    For the Record: Tax Increases Are Harmful, but Europe Has Pursued Them Anyway

    Heritage economist Salim Furth gave testimony last week to the Senate Budget Committee, reminding the Senators that economic research shows that deficit reduction should be pursued through spending cuts, not tax increases. Now he has responded to written questions in detail and explored the exemplary 1990s budget cuts. There is … More