Yesterday I suggested there was a large and arguably unbridgeable gap between those who view the working people who suffered most from the Great Recession as victims or perpetrators. At TNR Danny Vinik points to another one: between those who think austerity produced the current economic recovery and those who think austerity held it back:
Government spending has come crashing down over the past few years. [Grover] Norquist and other see this drop in federal spending as the cause of greater economic growth. But that’s not the case. One reason that spending has declined is that automatic stabilizers like food stamps and unemployment benefits, which initially increased federal spending when the financial crisis hit, receded. In that case, the fall in spending is the effect of stronger growth.
That’s not the only reason the spending has declined. Health care costs have grown slower, stimulus spending ended, and sequestration caused sharp cutbacks. All of this has also reduced interest payments on the debt. Here’s where Norquist and others are wrong, though: The recovery actually strengthened despite the harmful effects of this drop in spending, not because of it. By one estimate, the sequester cost the economy 1.2 million jobs in 2013 alone.
In fact, one of the big reasons that the economy kicked into gear in the latter half of this year is that the Murray-Ryan budget deal alleviated much of sequestration. Fiscal policy, finally, is largely not standing in the way of stronger growth.
Argue as he might, of course, Vinik is not about to convince Grover Norquist or any other prominent Republicans that austerity’s not been good for the economy–even given the dramatic demonstration going on in Europe. They have what might be called a theological commitment to lower taxes and smaller government, and admitting this ideology can produce anything other than progress and puppies just ain’t in the cards–unless they are talking about the shiftless slackers in the lower and middle classes who deserve to suffer, of course.
