At a New Hampshire town hall today, Paul Ryan said that if we “cut spending” will avoid European austerity, and America will be the “port in the storm of the global economy.”
In other words, if we adopt radical austerity now, we won’t have radical austerity later.
As their plan sort of defeats the purpose of avoiding radical austerity, I have good news for Paul Ryan. We are already the port in the storm of the global economy, thanks to President Obama’s Recovery Act.
The Atlantic’s Robert Wright uncovered a graph that shows America in the last three years outperformed similar economies with “high per capita GDP ” — the European Union and Japan.
When George W. Bush took office, US unemployment was a bit lower than Japan’s and about four percentage points lower than Europe’s. When he left office, US unemployment was about the same as Europe’s and about four percentage points higher than Japan’s. So: things got way worse compared to both Europe and Japan…
…[Obama's Recovery Act] was passed in February of 2009, and by the beginning of May, only 3 percent of stimulus expenditures had been made–and, of course, given that some of the employment attributable to this spending comes from second-order effects, you wouldn’t expect even 3 percent of the impact by then. So let’s take May 1 as the date when you could start realistically looking for appreciable stimulus impact.
What do you see as of May? You see the sharp upward slope of the unemployment curve, which Obama inherited from the Bush years, begin to moderate. And within five months the unemployment rate has reached its acme, after which it drops considerably. Of course, it would be great if it had dropped further, but it would be a lot easier to blame its failure to drop further on president Obama had Europe’s unemployment rate, in the same period, not risen by a full percentage point; or had Japan’s unemployment rate fallen more sharply than, or even as sharply as, America’s.
American unemployment went down while Europe’s went up in large part because America pursued Keynesian stimulus after the financial crisis — in other words, intentionally increasing budget deficits in order to plow money back into the economy and counter private-sector pullback — and Europe pursued deficit-cutting austerity.
How does Mitt Romney’s sidekick deal with this reality?
Paul Ryan not only ignores it. He promises a return to an imaginary past when American had no debt at all.
Get people back to work. Cut spending. Reform government. Prevent us from being Europe. And then we’ll be the port in the storm of the global economy. America will be the place you want to create jobs, you want to have your company. This is the engine of economic growth we’ve had before. We can turn it around. And if we do that, then we’ll get our debt under control and get it paid off. And our kids and our grandkids will have a debt-free nation, just like our parents.
The assertion is that America’s best days of 20th century happened because America “cut spending” and became “debt-free.”
And our debt levels were particularly high in the 1930s, 40s and 50s, which led to robust economic expansion as we responsibly used debt to finance improvements in infrastructure and education.
The only way the Romney-Ryan ticket can sell “tax cuts for rich, austerity for the rest” is to 1) pretend it’s not austerity and 2) pretend there was a glorious American past without debt.
But that’s not how we built America in the last century. And it’s not how Obama beat Europe over the last three years.