Spinning Into Austerity
by digby
Steven Moore just told me that the unemployment rate is down because of the tax cuts signed in December. I’m guessing this is part of the new “cut and grow” GOP spin:
GOP leaders and their top aides say they are recalibrating their communications strategy. They are shifting from a constant uttering of “Where are the jobs?” to explaining how their actions on the floor will spur the economy.
The centerpiece right now is an argument over whether a proposal to slash spending on domestic programs will create jobs.
The cuts, envisioned for a Continuing Resolution to fund the government through the end of September, will “restore restraints to the broken budget process and help promote better economic conditions for sustained job creation,” Republicans argued in a fresh set of talking points circulated to lawmakers Thursday.
They’ll also take to the House floor to direct committees to cut back what they consider harmful regulations — and during the course of the debate, committee chairmen will speak about how they are working to create jobs. House Majority Leader Eric Cantor (R-Va.) told committee chairmen during their interviews that their committee work must create jobs, reduce spending and shrink government.
“The expectation is that all Committee Chairmen conduct an appropriate and thorough oversight process with a focus on economic growth and private sector job creation, or as we call it – the cut and grow agenda,” said Cantor spokesman Brad Dayspring. “That means a review of Administration policy that had a negative impact on jobs as well as a focus on proactive solutions that empower the private sector to get America working again.”
Gosh, I sure they can find common ground with the president on this because it’s working out so well everywhere else it’s been tried:
Fiscal austerity has already been started in Greece, Ireland, Spain and Portugal, and this seems to be pushing all of them back into recession. Over the last four quarters, growth in Greece was negative and falling, and bond investors are once more demanding sky-high returns to compensate their risk. The excuse in these countries was that they have little choice because they are stuck in the European monetary union and don’t have the ability to depreciate their exchange rate.
The U.K. may be a purer case of the harm austerity at the wrong time can inflict. Britain now looks as if it is headed back into recession on fear about the damage that will be done by massive spending cuts and tax increases, which haven’t even gone into effect yet. Government ministers with their talk of austerity have already smashed confidence.
The Chancellor of the Exchequer George Osborne has said the economy was “bankrupt” and had “run out of money,” which of course is simply untrue. Prime Minister David Cameron and other ministers made similar unsupported claims, which seem to have had a deleterious effect on animal spirits.
Confidence Game
Despite the government’s claims that its intent was to raise confidence, consumer and business confidence tumbled right after the new government took office.
Businesses and consumers know what is coming and have cut back accordingly. Retail spending has flat-lined. The balance of trade is deteriorating. Unemployment is rising, and house prices have started to fall again.
Earlier this week, the Office of National Statistics reported that fourth-quarter gross domestic product slumped 0.5 percent while forecasters had expected a gain of 0.5 percent. The ONS suggested that bad weather — as if the U.K. had any other kind in the winter — had contributed to the decline and without it growth would have been zero.
[…]
The government’s Plan B to this point has been to count on the central bank to keep rates down and, if the recovery goes into reverse, do more quantitative easing. But with inflation rising, and minutes of the last meeting of the Bank of England’s Monetary Policy Committee showing signs of hawkishness, it’s hard to imagine that monetary policy will ride to the government’s rescue.
Fiscal austerity in the U.K. is failing. The only good thing to be said about it is that it might offer some lessons for the U.S.
I’m not sure they’re taking the right lessons. But if they are, I have a sinking feeling that they will feel they need to pretend to be pushing an austerity agenda without really doing it — by cutting the entitlements which don’t kick in until the future. This will be how they will require “sacrifice” and prove their deficit seriousness — by requiring it of the elderly of the future, aka the younger people of today. And the diabolically clever thing about it is that they’ll do it in the name of their grandchildren.
Sadly, it won’t work. Democrats who sign on to this are being useful idiots for the conservatives and very useful servants for the wealthy. Nobody else will benefit in the short run and a whole lot of people will suffer in the long run. But then, as the old story goes, the people who did this will all be dead.
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