Austerity is wrong medicine for bleeding economy

The labor movement has persuasively argued that the election’s mandate was to create jobs and resolve the economic mess in the interests of working people. The election’s mandate was not to make that mess worse. And yet, this is precisely what the Republican policies of draconian spending cuts would do. Nothing could be more harmful.

What is delaying an economic recovery is not too much spending and a growing deficit, but not enough federal spending.

The economy is stalled and spending is down. Consumers are up to their ears in debt and are understandably reluctant to use scarce dollars to buy things like refrigerators, cars, houses, or home improvements. And don’t hold your breath waiting for the capitalist class, sitting on roughly two trillion dollars – yes, $2,000,000,000 – to invest its surplus cash in new hiring and productive capacity.

The crisis gripping the country and world is one of demand insufficiency. Thus to cut government spending for jobs, infrastructure, green technology, public education, and aid to local governments in these circumstances is like throwing fuel on a fire – things will get worse, maybe much worse, before they get better.

Nevertheless, the Republican right, if it has its way, is determined to take a meat axe to people’s programs at the federal, state and local level. Government, it is said, has to live within its means like everyone else does.

But the truth is just the opposite. For the time being government has to live, not within, but beyond its means. Its immediate imperative is to put dollars in the hands of people who will spend those dollars, namely working and poor people, people of color, youth, and seniors. Nothing could be worse than for the government to tighten its belt in a period when the economy is slumping, unemployment is stuck in the double-digit range, investment in new plants and equipment is meager, and consumer demand is low.

That would be economic suicide. It could turn the warnings of a “double dip” of the economy into a reality.

The millions who went to the polls two weeks ago didn’t cast their vote for policies that will drive the economy further downward.

Many were influenced by the toxic environment that was engineered by the right-wing media and corporations and, sorry to say, abetted by the inadequate responses of the Democratic Party to an avalanche of misinformation, demagogy and lies. But it is still a good bet that for millions change looks like a job at a livable wage, a moratorium on mortgage payments, an extension of unemployment insurance, tax breaks for everybody but the richest families and corporations, stiffer regulations on banks and bankers’ pay, an expansion of public infrastructure projects, a health care plan that is affordable, universal and easy to understand, well-funded public schools, and retirement security.

Ask Americans feeling the pinch of this economic crisis if their priority – if they have to choose – is the list above or a balanced budget.

I strongly suspect it is the former, not the latter.

President Franklin Delano Roosevelt drank the Kool-Aid of austerity in 1937 and as a result a steep price had to be paid – the economic recovery that was under way lost its steam, hardship grew, and the president and the New Dealers in Congress took a hit in the 1938 elections. Hopefully, this mistake will not be repeated today, because the results will be much the same, including in 2012.

The Republican right won a major victory in this month’s midterm elections, but the Democrats and people’s movement retain important bases of power.

2010 is not 1994. Obama is not Bill Clinton, who was quick to declare the “era of big government is over.” The Senate remains in Democratic hands. The Progressive Caucus in the House is bigger and battle-tested. The coalition opposing the right is more united and more politically attuned. And the people reeling under the weight of a protracted downturn want relief first of all.

The economic policies of the Republican right are also full of contradictions and unsustainable.

The next two years are going to be a dogfight on the ground and in the corridors of political power. And, if the recent elections taught us anything it is that the battle over ideas cannot be underestimated. Right-wing extremism learned this lesson years ago. Our side of the class struggle has to learn and master it now.

To be successful everyone who desires a way out of the current crisis has to become a voice for reason, decency, fairness and economic justice. Simple logic tells us, and we should say it loud and clear: We were not at the switch when the economy unraveled, but we know who was – high finance and the same Republican voices who are now insisting that the government rein in spending for jobs and people’s needs and walk away from a wounded and bleeding economy.

Photo: Budget cuts protest at San Francisco State University last year. (coolmikeol CC 2.0) 



Sam Webb
Sam Webb

Sam Webb is a long-time writer living in New York. Earlier, he was active in the labor movement in his home state of Maine.