Where is John Maynard Keynes when you need him? While mainstream economists have long agreed that government spending is crucial for stimulating demand amid economic downturns, many elected leaders have pushed for the exact opposite approach—trying to slash government spending just when we need it most.
Austerity mania got going back in 2010, fueled by Tea Party demands to downsize government, but it reached new heights this year. In April, House Budget Chairman Paul Ryan released his blueprint for draconian budget cuts and, in August, Congressional Republicans nearly precipitated a U.S. government default to force over $2 trillion in budget cuts.
Meanwhile, radical right-wing governors like Scott Walker of Wisconsin and John Kasich of Ohio have rammed through deep budget cuts at the state level. Thousands of public sectors workers have been fired every week throughout 2011. Many of those fired have worked in our nation’s public schools. The result of all these cuts, say economists, will be a slower recovery—which will mean continued shortfalls of tax revenue, ongoing large outlays for safety net programs, and higher budget deficits over the long term. That’s exactly the kind of short-sighted austerity that Keynes warned about.