When we cut government spending, we reduce economic growth and we put more people out of work. When we reduce economic growth and put more people out of work, we reduce consumer spending, which, in turn, further reduces economic growth. When we reduce economic growth and put more people out of work, we also reduce tax revenue, which increases our budget deficit. So, then, to do what we were trying to do by enacting austerity in the first place--reduce the budget deficit--we have to cut even more government spending. And so on. This is whats happening in Greece, where the economy has shrunk 18% over the last several years, and the budget deficit is miles from being closed. (The Greek economy has shrunk 18%. Imagine that. Peak to trough, in 2008 and 2009, the worst recession since the Great Depression, the U.S. economy shrank about 7%. And it felt like our civilization was about to collapse.) Its also whats happening in the UK, where economic growth has been even worse than ours and they may be headed for a triple-dip recession. --- businessinsider/its-official-the-economy-is-crappy-because-were-cutting-government-spending-2013-2?IR=T&
Posted on: Thu, 16 Oct 2014 02:00:00 +0000
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