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Austerity Is Dead: Can Someone Please Tell Paul Ryan and His Deluded GOP Cohorts?

Republicans cling to a policy that pretty much everyone agrees is a total disaster.
 
 
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Photo Credit: A.M. Stan

 
 
 
 

Most of the recent economic data out of Europe has been exceedingly grim. A record high number of workers across the Eurozone are unemployed. Economies are shrinking. Debts are rising.

The anecdotes, though, are even worse. Hospitals are asking patients to supply their own syringes due to lack of funds. Trees on public land are being cut down by workers desperate for firewood to warm their homes. An entire generation of young workers is going to experience lower wages for the rest of their lives, due to years of being unemployed while in their 20s.

At this point, it’s safe to say that Europe’s response to the financial crisis of 2008 and its ensuing recession has failed. Austerity packages that were meant to jumpstart business investment and reduce what were viewed as unsustainable debt loads have instead crippled growth and caused untold amounts of human misery.

America, meanwhile, eschewed austerity for stimulus in the wake of the ’08 crisis. The result has been a return to slow, steady, if not overwhelming growth. But for Republicans in Congress, who constantly warn about the menace of the European social safety net, European austerity is a model to be emulated. And their insistence on cutting government spending no matter its effect on growth is bad news for the fragile economic recovery.

Here Comes Ryan, Again

With the so-called fiscal "cliff" firmly behind them and debt ceiling sufficiently punted away for a few months, House Republicans are turning their attention back to the federal budget process. House Budget Committee Chairman Paul Ryan (R-WI), fresh off his failed run for the vice-presidency, plans to release a budget that will balance in 10 years. Such a move, according to the Center for Budget and Policy Priorities, will require cutting one-sixth to one-third of most of the federal government, depending on how Ryan structures it.

But in the shorter term, congressional Republicans are planning to use a few pending deadlines to secure deep cuts in government spending. For instance, the current round of funding for the federal government expires in March, giving Republicans leverage to push for reductions. “The CR [Continuing Resolution]– it’s one of the areas where there is indeed an absolute deadline. Washington and Congress respond to crises and deadlines, and we need to address the spending side of the equation,” said Rep. Tom Price (R-GA).

Ryan himself has also said that the $1.2 billion in spending cuts known as the “sequester” are going to go into effect that same month. “I think the sequester’s going to happen, because that $1.2 trillion in spending cuts, we can’t lose those spending cuts,” Ryan said. The sequester will knock 0.7 percent off of economic growth in 2013, according to MacroEconomic Advisers.

The GOP is also agitating for $69 billion in new discretionary spending cuts that it hopes to trade for cuts to entitlements and the social safety net. All of this would be in addition to the $1.5 trillion in spending cuts ($2.5 trillion in total deficit reduction) to which President Obama has already agreed since Republicans took back the House in 2010.

What Austerity Hath Wrought

To see the effect such austerity can have, the GOP (and some Democrats) only needs to gaze across the Atlantic. Austerity measures have run the gamut in Europe, from mass public sector layoffs to increases in the retirement age, and of course, billions of dollars in spending cuts and tax increases. So what has Europe received for its efforts?

According to the latest data from Eurostat, Europe’s official statistics office, 18.8 million workers in the Eurozone and 26 million across the European continent are out of work. Spain leads the pack with a 27 percent unemployment rate and 6 million jobless workers. Youth unemployment in Spain is a whopping 55 percent. In Italy, 11 percent of workers are unemployed, including 38 percent of young workers. The story is the same across most of the continent.