What Austerity Has Wrought

Austerity Cuts

Drum surveys the damage:

So what has austerity cost us in the United States? The full price is hard to calculate, but the Congressional Budget Office figures that sequestration alone has cut GDP growth by about 0.8 percentage points. Since sequestration accounts for less than half of total belt-tightening over the past couple of years, a rough guess suggests that our austerity binge has cut economic growth by something like 2 percentage points—about half the total growth we might normally expect following a recession.

In a follow-up, Drum looks at normal government during recoveries:

Government spending at all levels is far below the level of any other recent recovery. Sixteen quarters after the end of the recession, spending during past recoveries has been 7-15 percent higher than it was at the start. This time it’s 7 percent lower, despite the fact that the 2008-09 recession was the deepest of the bunch. Reagan, Clinton, and Bush all benefited from rising spending during the economic recoveries on their watches. Only Obama has been forced to manage a recovery while government spending has plummeted.

This context is critical to understanding the anemic recovery. To be sure, government debt desperately needs long-term structural reform on entitlements and defense – but slashing spending in the last few years has been as effective here as in Europe. Were it not for the stimulus in 2009, we might be where much of Europe is languishing today. And note too that the GOP is largely responsible, both in state and local government and at the national level. You can think of this is prudence – but without real structural reform, it’s hardly that. I think of it in much simpler terms: sabotage to make Obama first a one-term and now a failed president.

They just hate him much more than they love their country.