The Great Austerity Experiment Has 'Failed Spectacularly'

Austerity, AFL-CIO Policy Director Damon Silvers said in a tweet yesterday, is "seeing a drowning man and pushing him under....[it] destroys worker bargaining power and replaces social insurance with Wall St. fees." 
The Center for American Progress (CAP), echoing Silvers' sentiment, is calling on Congress to abandon job-killing cuts and "grand bargains"—which aren't so "grand" for America's working families—and focus on what the country really needs: jobs. 
CAP President Neera Tanden told The Huffington Post

"Right now, Washington is focused on the wrong problem: promoting austerity policies now to massively reduce the deficit rather than focus on economic growth,’ she added. ‘Our report demonstrates that right now, we face a growth challenge."

CAP's new report, It’s Time to Hit the Reset Button on the Fiscal Debate, details the reasons why Congress must abandon deficit reduction policies:
- The key argument that high debt causes slower growth has crumbled.
- Countries around the world have experimented with austerity, and those experiments have failed spectacularly.
- The U.S. economy has not healed nearly as swiftly as was projected when the budget cutting began.
- The push for immediate debt reduction has resulted in some perverse policy outcomes.

CAP writes, "The predictions that the abnormally large deficits of the past several years would inevitably lead to spiking interest rates or ruinous economic collapse have proved to be extraordinarily wrong."
New York Times columnist Paul Krugman also lambasted the wrong-headed fiscal policy in a recent piece:
You get the idea: The austerity agenda looks a lot like a simple expression of upper-class preferences, wrapped in a facade of academic rigor. What the top 1 percent wants becomes what economic science says we must do.
Read the entire report: It’s Time to Hit the Reset Button on the Fiscal Debate



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