Promised Republican Economic Austerity Plan Will Ruin The Economy

Dave Johnson

The economy is at stake in this election. If Republicans take the Senate, they promise to impose severe austerity — even as austerity is proven to kill economies.

Europe’s economy is suffering because of its harsh austerity, and our economic recovery has been hampered by cuts in spending and layoffs of civil employees. But to true believers, austerity cannot fail; it can only be failed. So pay attention and be sure to vote and bring one reluctant voter with you.

Republicans Promise To Impose Severe Austerity

Republicans promise to impose severe, severe austerity if they take the Senate. Having the House – which they already control – and Senate means they can pass budgets and send them to the president. They say they will give the President a choice, sign the severe austerity budgets or let the government just shut down with no budget.

The already-passed House Republican Budget severely cuts the country’s ability to take care of basic needs. In “The Five Worst Things Republicans Have Promised To Do To Americans” CAF’s Terrance Heath reminded us what that House-passed budget would do:

  • Cut government spending by $5.1 trillion; with 69 percent of those cuts taken from programs that serve low-income and middle-class Americans.
  • Cut welfare programs by $5.4 billion over 10 years.
  • Turn Medicare into a voucher program, with “premium support” that shifts costs to the elderly.
  • Cut Medicaid, and turn it into a block grant to states.
  • Cut the Securities and Exchange Commission budget, leading to fewer regulators and the increased likelihood of another financial crisis.

That is what the House has already passed, but could not get through the Senate. Republicans campaigning for the Senate are promising to pass that budget as well as make further economy- and people-harming cuts. These include but are not limited to promising such things as a balanced budget amendment, which would require immediate cuts in the hundreds of billions per year; getting rid of the Department of Education; and repealing Obamacare, which would cut coverage for tens of millions of Americans and return the rest to the old system of not being covered if you actually get sick. The Washington Post’s Greg Sargent offers this example from Iowa Republican candidate Joni Ernst:

Ernst came out for a balanced budget amendment, said that would require “severe cuts,” reiterated her desire to eliminate the Department of Education, vowed a “good, hard look at entitlement programs,” and said electing a GOP Senate majority would be a key step towards all of this.

On retirement security, benefits are already too low. But Republican Senate candidates are talking about raising the retirement age to 70.

Republicans claim that taxes and government spending “take money out of the economy” and cost jobs. So far, with the cuts and the “sequester,” our country has suffered cuts of enormous magnitude. Did it work? Isaiah J. Poole took a look at this in “The Deficit Is Falling, But Where Are The Jobs?” Poole writes,

Economic growth is weak enough that the Federal Reserve, at its September meeting, agreed that it was not ready to signal that an interest rate increase would come soon, for fear of further hindering economic growth. … The evidence keeps piling up that the bipartisan consensus that we needed to focus on deficit reduction instead of full employment was disastrously wrong.

So the Republicans would severely cut government spending, literally taking trillions of dollars out of the economy, exactly as the economy is showing signs that the so-called “recovery” might start helping regular people. The Republican economic plan would sabotage and destroy that recovery and return us to recession, as it has done in Europe.

Austerity Has Been And Is Crippling Europe

Europe is suffering from a longer depression than in the 1930s. (That’s depression, not recession.)

Last year the International Monetary Fund even turned around and criticized austerity during a downturn. The Los Angeles Times, in “Europe austerity strategy is hurting growth, IMF says,” reported, “In papers and at forums, fund officials and outside experts said it was clear that government belt-tightening was taking a deeper toll on growth, especially in struggling Eurozone economies, than many of them previously thought.”

Europe’s austerity argument continues. From Friday’s New York Times, Bloc in Europe Starts to Balk Over Austerity:

In past years … the eurozone nations buckled under to German demands to slash budget deficits and roll back public services, and then watched in dismay as unemployment rates shot into the double digits and growth collapsed. Now, France, Italy and the European Central Bank have coalesced into a bloc against Chancellor Angela Merkel of Germany, and they are insisting that Berlin change course.

There are important things people need governments to spend money for, but Republicans are saying they will do exactly the opposite.

What If We Have Another Downturn?

But wait, there’s more. Not only would threatened Republican cuts harm the economy and possibly throw us back into recession – what happens if we have another downturn with Republicans in control of the Senate?

Booms and busts come in cycles. We have periods of growth, and then we have recessions. Our economy has been in a very long period of growth – even if regular people are not feeling it. The cyclical pattern alone should be a warning, but the idea of Republican-imposed austerity after the election should be an alarm bell.

So another downturn will come. Except this time there won’t be any government help. In the Depression, we learned that a downturn is the time for government to step in. Businesses are cutting back, people are cutting back, and this turns into a terrible downward spiral. So in every downturn since, government has stepped in to take the opportunity to fix up infrastructure and other projects to get people working, so they will go to stores and revive businesses. It’s called “stimulus” but it is also when government plants the seeds for the economy of the future by modernizing infrastructure like roads, ports, airports, power systems, water systems, and the other things that help businesses prosper.

With Republicans in control of the House and Senate, there won’t be any stimulus of any kind whatsoever, no long-term unemployment checks, no nothing.

What do we do then?

This is a warning call of what might be coming. Pay attention and be sure to vote and bring at least one reluctant voter with you.

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