May 8, 2012
The defeat of French President Nicolas Sarkozy in Sunday’s French elections provides a clear lesson to America. So does the fall of the conservative Dutch government, the rebuke of the British conservative government in local elections, the defeat of the establishment parties in Greece and the turmoil in Spain. Europeans are using democratic elections and demonstrations to send a message: Austerity is spreading unacceptable human misery.
For months, conservative pundits have criticized President Barack Obama for not forcing more deficit reduction. House Republicans boast that their Mitt Romney-endorsed budget would cut deficits faster by slashing spending — although they refuse to reveal what they would slash. Deficits are unpopular. They represent out-of-control government spending. Tightening our belts in hard times seems both responsible and inevitable.
For years, Greece’s soaring deficits have been the object lesson of the right: Run up deficits and investors won’t buy your bonds and you’ll face bankruptcy.
But the real lesson of Greece, Spain, France, Ireland and others is that slashing spending in a weak economy serves only to drive the economy back into recession, increase unemployment and spread poverty. And it does little to reduce deficits or to reassure investors who worry about the economy tanking. Austerity is like bleeding a patient who is still recovering from a heart attack.
The U.S. enjoys better growth than Europe because we’ve done more to stimulate our economy and have been slower to turn to deficit reduction. But states and localities forced to balance budgets because of state constitutional requirements are laying off teachers and police and firefighters. Now the federal budget is being cut, adding to the drag on the economy. And if, no matter who wins this fall, the administration and Congress join in a “grand bargain” that combines spending cuts and tax increases, Americans may well learn the European lesson about austerity directly.
This economy is barely out of the operating room and just beginning to recover. Large companies are sitting on trillions of profits looking for customers. Small businesses won’t hire until they see consumers coming in the door. We still have mass unemployment, falling wages and more families losing their homes. Yet Washington seems unable or unwilling to act.
This week, a committee of the Senate and House will consider the only major jobs program before the Congress: the transportation bill, which funds rebuilding roads, bridges and mass transit. The Senate passed a small, two-year authorization with overwhelming bipartisan support. But zealous House Republicans have defeated everything except temporary extensions.
This makes no sense. In fact, we should be doing much more to rebuild America. Interest rates are at near-record lows. The construction industry is idle. There will never be a better opportunity to borrow the money needed to rebuild an infrastructure that is in dangerous disrepair.
Maybe we should pay the legislators to junket in Europe. Let them see the riots, visit with defeated politicians, talk to embarrassed economists now calling for a change in course. The House Republican caucus doesn’t seem to worry about the growing poverty in our cities or wonder whether those cities will blow up this summer. Perhaps they might reconsider if they learn from the Europeans that enforcing brutal measures on citizens to pay for the mess caused by banks doesn’t just increase poverty and unemployment, it shortens political careers.
