The European Union is going soft on austerity. On Wednesday the European Commission admitted that austerity isn't working to trim deficits, and it's making unemployment worse. Now some countries will be allowed to stretch spending cuts over a longer time. France, Spain, Poland and Slovenia will be allowed to two additional years, and the Netherlands and Portugal get one extra year.
Hannes Swoboda, leader of the European Parliament's center-left caucus, says it's a timid start. A really meaningful move would be to stretch the budget trimming out over 10 or 15 years.
Leading U.S. economists will likely agree. They've denounced our sequester -- which is austerity by another name -- as a bogus solution to our own deficit. It takes money out of people's pockets, slows demand and spending, and puts the brakes on the recovery. The EU Commission seems to be recognizing that reality, unlike our Congress,
At a time when the most vulnerable Americans are losing vital services like Meals on Wheels and Head Start because of the disastrous sequester, Congress has refused to act -- except for one time a few weeks ago. Lawmakers from both parties voted to give the Federal Aviation Administration more money to prevent delays in air travel. Then they quickly left town on flights back to their home districts, so they could explain to 3.8 million long-term jobless Americans why they'll lose and average of $1,000 each in unemployment benefits by September 30.
Is speedier air travel more important than lunch for senior citizens or early childhood education for pre-schoolers? How about cancer research, heating assistance, police protection, or special education? All have lost funding to the sequester.
Of course the cuts could be canceled or replaced. The president and Congress created them, and Congress could cancel them. But will they? Not likely. Mr. Obama wants a 50-50 mix of spending cuts and tax increases to replace the sequester. Congressional Republicans say they are willing to shift the cuts - to food stamps, children's health insurance and Medicaid. But they won't raise taxes on the rich.
Repealing just one tax loophole that let UnitedHealth deduct $194 million in fatcat executive compensation on its tax return would put $68 million back in the federal treasury. That's enough to extend full federal unemployment benefits for the rest of the fiscal year to over 65,000 jobless Americans.
With 4 in 10 Americans feeling the pain, calls from hurting citizens for Congress to repeal the sequester have been mounting in the last couple of weeks. The EU announcement will undoubtedly give the effort a boost. But if our lawmakers continue to sit on their first class airline seats and refuse to act, it could finally push the economy over the cliff, taking millions of American families with it.Listen to the audio blog here:
How will Trump’s administration impact you? Learn more