Austerity USA
Last edited Sun Jun 3, 2012, 12:24 PM - Edit history (1)
Our federal government has done a better job on the economy than some nations but America is not just the federal government. We are more decentralized than a lot of countries are. Our states and localities, many with mandatory balanced budgets, have done a very, very bad job on the economy.
Since a large part of total American government cannot borrow our federal government is the only entity that can provide any stimulus. This means that the federal deficit is the whole show, and that federal borrowing has to make up for both private sector austerity and public sector austerity.
Which means our federal deficit is like one division (albeit a large division) of a corporation expanding while every other division is firing everyone.
In aggregate, which is the only way to consider something like this, America is currently under a government austerity regime that may be larger and more real than that in a lot of countries we associate with wrong-headed austerity plans.
Government in America is shrinking.
As Krugman notes today, "we haven’t seen spending cuts like this since the demobilization that followed the Korean War."
If we do not fetishize the federal government as being the entirety of government (a RW theme) the whole Republican argument about government evaporates. The economy is not stumbling despite stimulus, it is stumbling because of austerity.
Rate of change of real government spending per capita (federal, state, and local)
Chart from:
http://krugman.blogs.nytimes.com/2012/06/03/1937-2/
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