Why Can’t Europe Save Austerity For Later?
washingtonpost.com — Right now, the European countries facing debt crises are all being told the same thing: Austerity is the answer! Cut spending, raise taxes, pay off your debts. Now. The pitfall, of course, is that austerity measures could trample the already-fragile growth in places like Italy and Spain, which will, in turn, just exacerbate their short-term debt problems. As an example, the OECD is predicting that Britain’s austerity experiment could push the country into recession, which might, in turn, lead to a higher debt-to-GDP ratio than before the Cameron government began slashing. So here’s a question: Why don’t countries like Spain or Italy or France try to do what the Obama administration has proposed in the United States? Enact some stimulus this year, while the economy’s weak, and then cut future spending. Avert a recession now, austerity later.