We are constantly being bombarded by the need for cutting government spending, which is being pushed by a group referred to by a prominent economist as “Very Important People.”
Their dire predictions have time and again proven to be wrong.
The current fiscal situation is being used to pursue the ever-present goal of conservatives: elimination of the safety net for the less fortunate of our society.
That list includes Social Security, food stamps, Affordable Health Care Act, minimum wage and more.
In 2001, the U.S had a surplus and a rapidly declining ratio of debt to GDP. Social Security reserves were projected increasing faster than claims of retirees.
The debt ratio rose between 2001 and 2008 because of two wars and tax cuts for the rich — not run-amok spending on welfare. The main reason for the sharp rise in the deficit was the loss of revenue due to the recession.
The deficit did not cause the recession, it was the result of it.
The only way to correct a problem is to determine the cause of it, address the causes and take steps to ensure they do not reoccur. Tax cuts and two wars caused the first growth of the debt. The recession, which was caused primarily by cutting the financial market controls, caused the tremendous growth in the debt.
Logic would call for reversing the tax cuts, establishing effective controls on the financial industry, holding the perpetrators responsible and making job creation the No. 1 priority. Job creation will increase tax revenue; austerity reduces it.
Conservatives are opposed to all of the above. Most mainstream economists agree that austerity will make a recession worse and increase government debt.