Expansionary Austerity is a bad joke.
Kash at Street Light passes along the "success" of the British experiment in Expansionary Austerity:
Gross Domestic Product (GDP) grew by 0.2% in the second quarter, according to the Office for National Statistics, down from 0.5% in the previous quarter.
The think tank the Institute for Public Policy Research (IPPR) was also critical of the level of growth. "Last June, the OBR [Office for Budget Responsibility] predicted GDP would grow by 2.6% in 2011, but even if the economy gets back on track in quarters three and four this year, it will barely reach 1.2%," said IPPR director Nick Pearce.
It's not mysterious: when you raise taxes and cut government spending, growth slows. And when you do that during a very fragile and weak recovery, you can push your economy back into recession, or at best, choke off growth almonst completely. That's exactly why, as has been extensively written about both here and elsewhere, austerity during a time of economic weakness is not a good way to beat a budget deficit, and will be largely self-defeating.
Dave Kurtz at Talking Points Memo raises the relevant point of the entire kabuki kamikaze debt ceiling debabcle:
Harry Reid's plan as advertised: $2.7 trillion
CBO projection: $2.2 trillion
John Boehner's plan as advertised: $1 trillion
CBO projection: $710 billion
Reid still wins, by a large margin. You can see why many Republicans aren't smitten with Boehner's plan.
But forget those figures for a moment. Here are the two numbers I'd really like to see: forecasted GDP under each plan and projected unemployment under each plan. That's a much sounder basis on which to evaluate these plans -- and the whole austerity craze -- than just ... whose is bigger.
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