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Around the world, we're seeing the disastrous outcomes of the passion for "austerity," basically governments cutting services and investments in the future to the bone while refusing to raise revenues by taxing the rich or corporations. They claim the intent is to somehow cut our way to prosperity, even as in case after case the evidence shows it has the opposite effect. Here's how that plays out with state budgets:

The Center for American Progress Action Fund's Adam Hersh breaks it down:

Relative to national economic trends, states that increased spending enjoyed on average:
  • 0.2 percentage point decrease in the unemployment rate
  • 1.4 percent increase in private employment
  • 0.5 percent real economic growth since the start of the recession

In contrast, states that cut spending saw on average

  • 1 percentage point increase in the unemployment rate
  • 2.1 percent loss of private employment
  • 2.9 percent real economic contraction relative to the national economic trend
We could debate whether the Republicans (and some Democrats) pushing these policies see rising unemployment as a good thing as opposed to just not caring since it doesn't touch their families. But there's no way to seriously argue they're trying to reduce unemployment and put people back to work.

Originally posted to Daily Kos Labor on Tue Apr 17, 2012 at 06:54 AM PDT.

Also republished by Income Inequality Kos and Daily Kos.

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Comment Preferences

  •  You mean putting government employees (3+ / 0-)
    Recommended by:
    DRo, Candide08, Horace Boothroyd III

    Out of work has a negative effect on the businesses that need them as customers?!  I am shocked! SHOCKED! I tell you!

    Ask top al Qaeda leaders about Obama's foreign policy. Wait, you can't. They're dead. -Paul Begala

    by Fickle on Tue Apr 17, 2012 at 07:02:27 AM PDT

    •  It is also a double-edged sword for... (1+ / 0-)
      Recommended by:
      Horace Boothroyd III

      states with republican control of state government.  The Rovian strategy of making Obama fail by having the party in control take the brunt of the bad feelings doesn't work that well when state governments are under 'pub control.

      "The right to be heard does not automatically include the right to be taken seriously." -- Hubert H. Humphrey

      by Candide08 on Tue Apr 17, 2012 at 07:48:24 AM PDT

      [ Parent ]

  •  Once more, from the top.... (6+ / 0-)
    there's no way to seriously argue they're trying to reduce unemployment and put people back to work.
    Repubs do NOT want to put people back to work.

    Repubs HATE  for Americans to have jobs.

    Repubs want Americans unemployed, starving and contemplating either suicide - which gets them off the welfare/unemployment roles, or crime, which sends them into the clutches of their For-Profit Private Prison cronies.

    We have robots now, and lots of what we need being produced in China.

    Repubs hate labor, they hate you, they hate your family.

    They only thing they like are fertilized spooges and money.

    Democrats simply go along with them on almost all of this or, if they disagree, they wimp out about how they "don't have the votes".

    Don't rec my comment. I'm just here to call it as I see it.

    #occupywallstreet: Although I know the rhythm you'd prefer me dancing to, I'll turn my revolt into style.

    by xxdr zombiexx on Sat Apr 21, 2012 at 03:35:13 PM PDT

  •  Did anyone here happen to see Tweety last (2+ / 0-)
    Recommended by:
    arealniceguy, Amber6541

    night with his closing comment?

    As usual, Tweety makes these predictions and then sticks to it and he will not sway from them.  ( remember in 2007 how he predicted a Rudy vs Hillary race for the Presidency and Hillary would be win. If anyone disagreed, he badgered them?)

    Well now his latest prediction is that nothing in this election will matter except job numbers. He said if Jobless rate is 8 pct, Obama wins but if Jobless numbers go up to around 9 pct, Romney wins.

    OK , he makes some sense but he thinks this is the only factor that will matter..period, end of story.

    Anyone agree? I think it is more complicated than Tweety does.

    Follow PA Keystone Liberals on Twitter: @KeystoneLibs

    by wishingwell on Sat Apr 21, 2012 at 03:37:45 PM PDT

    •  State Republicans are doing their part (4+ / 0-)

      by cutting state jobs, so that no matter what is done on the federal level the unemployment numbers will stand a very good chance of rising.  And they're counting on Republicans in Washington to keep anything good from happening on the employment front.

      "In this world of sin and sorrow there is always something to be thankful for; as for me, I rejoice that I am not a Republican." - H. L. Mencken

      by SueDe on Sat Apr 21, 2012 at 03:53:36 PM PDT

      [ Parent ]

    •  So why do you waste your time listening to him? (1+ / 0-)
      Recommended by:

      Tweety the tool™.

      #occupywallstreet: Although I know the rhythm you'd prefer me dancing to, I'll turn my revolt into style.

      by xxdr zombiexx on Sat Apr 21, 2012 at 04:08:22 PM PDT

      [ Parent ]

      •  I do not watch him except last few minutes (0+ / 0-)

        as I turned over waiting for the Ed Show..that happens when I watch TV while eating dinner, sometimes I do catch part of Tweety unfortunately.  I wanted to see something on the Ed Show and see what he was going to cover and Tweety is on right before Ed.

        Follow PA Keystone Liberals on Twitter: @KeystoneLibs

        by wishingwell on Sun Apr 22, 2012 at 10:11:03 AM PDT

        [ Parent ]

  •  I have not (4+ / 0-)
    Recommended by:
    arealniceguy, wsexson, ChemBob, Amber6541

    been able to figure out why the people who support cuts in gov jobs don't foresee that these reductions will cause contraction.

    Can they not understand the following: layoff 5,000 workers; now 5,000 workers need unemployment benefits.  Now these people can't buy what they used to; now the businesses they bot from aren't getting $$$ [except for the limited unemployment benefit $$]

    How can people not see that??????

    Or that layoffs in general cause economic contraction....but, no, everyone should be all austerity.

    The banks have a stranglehold on the political process. Mike Whitney

    by dfarrah on Sat Apr 21, 2012 at 03:41:05 PM PDT

    •  Paul Krugman (3+ / 0-)
      Recommended by:
      wsexson, ChemBob, Amber6541

      has been singing this song and all its attendant verses about both our economy and that of Europe since the economic discussion turned from stimulus to austerity.  In fact he's become more shrill as the problems with austerity in Europe become more obvious, and U.S. politicians continue to preach its imagined benefits even in the face of its failures.

      "In this world of sin and sorrow there is always something to be thankful for; as for me, I rejoice that I am not a Republican." - H. L. Mencken

      by SueDe on Sat Apr 21, 2012 at 04:02:06 PM PDT

      [ Parent ]

    •  They DON'T CARE. (4+ / 0-)
      Recommended by:
      wsexson, ChemBob, Aunt Martha, Amber6541

      #occupywallstreet: Although I know the rhythm you'd prefer me dancing to, I'll turn my revolt into style.

      by xxdr zombiexx on Sat Apr 21, 2012 at 04:10:22 PM PDT

      [ Parent ]

    •  I agree 100% with what your saying but.... (2+ / 0-)
      Recommended by:
      Amber6541, dfarrah

      I also see something else that might be interesting to research. When a republican state tanks due to state government job slashing and neighboring Democratic states are rebounding with better economies how much effect does that have on cities and towns near state borders and thus the republican state as a whole. Say for example the Democrating state might have 8% unemployment and the Republican 9% but if there were several big cities in the Rebublican state that were near the border with the Democrtatic state so it's unemployed could get jobs in the Democratic state and then spend that money in the republican state thus giving it better stats than it's bad policies would normally show. I've lived in cities that were in good income producing states right next to ones that didn't there would be a whole lot of cars leaving the low income state in the morning and then heading back at night. In one city that had a river as it’s border they'd have all four lanes of one bridge one way into the city in the morning and one way out of the city in the afternoon and early evenings. The rest of the time the bridge was two lanes each way.
          Due to cause and effect on a lot of levels this might be a researchers nightmare but it might show how republicans are able to stay in power longer even with their terrible policies.

      Just A Real Nice Guy, thinking out loud.

      by arealniceguy on Sat Apr 21, 2012 at 04:31:00 PM PDT

      [ Parent ]

    •  Feature, not bug. Its a 2fer. More unemploy so BO (1+ / 0-)
      Recommended by:

      loses, and the cuts pay for big tax cuts to the rich driving the deficits and job loses even higher.  Its a Thug win/win.

      For the rest of us?  Disaster.

      Nothing new.

      Only question is where Thugs will start a war to create a false prosperity bubble for their re-elect.

      Doubt it?  See, W.

  •  There's something goofy about that data. (0+ / 0-)

    Mississippi has not had a 20+ % spending increase since the recession. I can't figure out what on earth the Center for American Progress was looking at, and haven't been able to find what data they were using at the link. Maybe I'm missing something . . .  

  •  Yes, we are racing toward another dip... (1+ / 0-)
    Recommended by:

    the last one in the pool is a rotten egg.

  •  Most states are required to have a balanced (0+ / 0-)

    budget, so it is not surprising to see the states hit hardest by recession to have the greatest spending cuts.

    The cuts in government spending were caused mainly by the decline in decline tax revenues.

    As the diary suggests that increasing taxes on the wealthy would have been a better solution, further analysis seeing what the regression line is for states that increased tax rates on the rich, a second regression for states that cut rates for the rich and a third for states that made no change.

    Seeing how state economies responded to changing tax rates on the wealthy may show important results. This would test the diary's assertion that states with increased tax rate policies did better.

    The most important way to protect the environment is not to have more than one child.

    by nextstep on Sat Apr 21, 2012 at 04:00:43 PM PDT

    •  And yet many gave rich big tax cuts too. =g more c (0+ / 0-)

      cuts. Their Coonstitutions no doubt require that too, eh?

      Don't make excuses for Thug perfididy.  They are evil.  Plain and simple.

    •  Raising taxes didn't help Illinois. (0+ / 0-)

      Quinn Presses Illinois to Join States Reining In Pension Costs

      Quinn, who said his plan would provide 100 percent funding for the system by 2042, has additional incentive to act. Standard & Poor’s said in a report yesterday that it might cut the state’s general-obligation rating by multiple levels “if there is no progress on structural budget solutions and if Illinois does not address the significant pension liabilities.”

      The retirement plan plays a large part in the fiscal distress in Illinois, which has a rating of A+, fifth-highest, and a negative outlook, the report said. The state is rated the lowest among the states by Moody’s Investors Service, at A2

      -7.75 -4.67

      "Freedom's just another word for nothing left to lose."

      There are no Christians in foxholes.

      by Odysseus on Sat Apr 21, 2012 at 11:25:08 PM PDT

      [ Parent ]

  •  Austerity causes retraction (3+ / 0-)
    Recommended by:
    mike101, ChemBob, Odysseus

    This is what it did in third world countries where it was first tried, it is what it does now.

    I know why conservatives support it.

    I don't know why anyone else does.

    In the meantime, as long as Democrats keep singing from the austerity hymnal, there is no way to impose political costs on Republicans for this.  Which means there is nothing stopping them from continuing it, thereby causing more and more hardship on all of us.

    This also means it is not enough for Dems to not impose austerity. We need them to do the opposite.  In every state where Democrats have control (not many, admittedly), and in every place where they can act despite opposition (i.e. unilateral executive action where it is possible), we need action designed to combat austerity.

    Politics is the art of the possible, but that means you have to think about changing what is possible, not that you have to accept it in perpetuity. @DavidKaib

    by David Kaib on Sat Apr 21, 2012 at 04:04:12 PM PDT

  •  It'd be nice to add in an international dimension (1+ / 0-)
    Recommended by:
    David Kaib

    comparing nations that followed austerity programs to solve their debt problems vs. those that defaulted.

    Greece is an economic basket case, for example, whereas both Argentina and Iceland defaulted on their debts and appear to be reasonably prosperous today.

    Argentina GDP, 1962-2010 (default in 2002)

    Iceland GDP, 1970-2010 (default in 2009)

    Greece GDP, 1960-2010

    Give me your tired, your poor, Your huddled masses yearning to breathe free
    ¡Boycott Arizona!

    by litho on Sat Apr 21, 2012 at 04:07:03 PM PDT

    •  Iceland neither defaulted on its debt (0+ / 0-)

      nor is it in good economic shape today.

      •  That's really odd (0+ / 0-)

        because when I google "Iceland default" I get articles like this one:

        Iceland is warning Greece and Ireland not to copy its recovery model even though the Atlantic island managed a return to international debt markets less than three years after letting its banks default on $85 billion.
        And this one:
        Greeks May Look North To Iceland's Debt Default
        John Browne (2011.10.21 ) Investing

        ....When faced with the insurmountable and reckless debts, a cascading recession, and the demands of the international political elite for more debt and austerity, the government of Iceland put it to their citizens. In early 2009, with a vote of 90 percent, Icelanders chose to default, leaving foreign investors, bankers and governments, holding much of the losses. The event stands as a stark reminder to the dangers of lending to overly indebted borrowers.

        I defer to your better knowledge of Iceland, but there's definitely a meme out there that Iceland not only defaulted but that its economy has since recovered.

        Give me your tired, your poor, Your huddled masses yearning to breathe free
        ¡Boycott Arizona!

        by litho on Sun Apr 22, 2012 at 04:16:33 AM PDT

        [ Parent ]

        •  It's a really annoying meme (0+ / 0-)

          First off, Bloomberg is correct, and "Capital Magazine" (whatever that is, is wrong).  But note the wording in Bloomberg.  Three of Iceland's banks defaulted.  The nation did not.  The nation has always honored its debts, which is why it's able to reenter capital markets so readily.  However, even though the banks defaulted, when they went into receivership, the government took out massive loans and pumped a huge amount of money into their restructuring, so that they became worth enough to pay off their (again, to reiterate, private) debts.  Which they are now nearly done doing.  So not only did Iceland never default on public debt, but it indebted itself to help pay off private debt.

          That didn't stop the UK and Netherlands from suing over the delay, mind you.

          The "Capital Magazine" article is more wrong than just on that; it also grossly misprepresents the referendums (note: plural).

  •  The cause and effect seem fuzzy here (2+ / 0-)
    Recommended by:
    Odysseus, hi5enigma

    The alternative explanation would be that states with poorly performing economies (for other reasons) face budget shortfalls and usually end up making cuts.  

    I agree that economically it's a dangerous time to cut government spending.  But I don't think spending cuts are the major factor behind the economic changes on this chart.

    There are thousands hacking at the branches of evil to one who is striking at the root. -Thoreau

    by Frameshift on Sat Apr 21, 2012 at 07:01:32 PM PDT

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