By all indications, the US ruling class of Wall Street financiers is determined to follow Greece, Spain, Portugal, and Great Britain down the road to drastic austerity. The financiers of lower Manhattan are thus ignoring the evidence offered by these other countries showing that austerity policies reduce employment, lower production, cause severe mass privation, introduce powerful elements of chaos into society, and actually increase the government budget deficits in future years -- meaning that austerity fails even in its own terms.
Since the 1930s, it has been widely recognized that a policy of deflation with severe cuts in government spending and in expenditures for social services will plunge a country deeper into depression. Once the depression has hit, usually as the result of the collapse of a speculative bubble like the $2 quadrillion derivatives mania of 2000-2008, the private economy shrinks rapidly, leaving government spending as the principal form of economic activity. If the government budget is nevertheless cut, this lowers the overall rate of economic activity; working people paying taxes are turned into recipients of public assistance, and the budget deficit grows rapidly. The classic case is the German government of Chancellor Heinrich Brüning in 1930-32, whose brutal austerity policies shrank the national economy by about 25% over the course of two years, but still could not prevent the German budget deficit from growing.
Despite all this, there is today a consensus between Wall Street and Washington that draconian austerity must be imposed in the United States. This will be the case no matter whether Obama or Romney wins the upcoming election. Romney has been very open about his determination to rule in the name of the top 1% of financiers and oligarchs, while imposing hardships and sacrifices on the rest of the population. Obama is somewhat more discreet, but he also has clearly signaled his desire for a sweeping austerity program to be agreed on by the two major US parties as soon as possible, probably before the end of this year.
Observers have noted that Obama and Biden, in their three debates held so far with their Republican rivals, have never mentioned the traditional Democratic Party platform planks of raising the minimum wage; preserving the funding of the food stamp program (the Supplemental Nutrition Assistance Program of the US Department Of Agriculture) which keeps some 50 million Americans alive; maintaining and extending unemployment insurance payments to the jobless; or making it easier for trade unions to organize.
Sunday, October 21, 2012
"Republicans, Democrats attacking Americans in bipartisan push for savage austerity" (PressTV-Iran)
I must have missed this story: