09/19/2013 09:22 am ET Updated Nov 19, 2013

Think Again: Austerity Kills, and So Will the Sequester

On Tuesday, the Center for American Progress released a report called "4 Ways that Austerity Demands Have Reached New Extremes," which notes that the House Republican caucus is now proposing "spending cuts ... so severe that the House Republican caucus has been unable to pass actual spending bills to implement its own budget plan, since those bills would have to make deep and specific cuts that are beyond the pale of what even most conservatives would support." They are doing so based on the "claim that their demands for more austerity are a response to exploding budget deficits, but in fact, the federal budget deficit is shrinking, not growing."

As Nobel Laureate economist Paul Krugman argued at length in The New York Review of Books, recent history both in Europe and the United States has proven conclusively that "the results [of austerity] were disastrous--just about as one would have predicted from textbook macroeconomics." Not only has the experience of the nations that instituted austerity policies made their economic predicaments far worse than before, but the data upon which the arguments were made were also "deeply flawed." The so-called Reinhart-Rogoff thesis--in which the authors insisted that large levels of government debt would inevitably result in much lower rates of economic growth--was discredited when the authors belatedly made their data widely available in April 2013.

As Krugman notes, Thomas Herndon, a graduate student at the University of Massachusetts, Amherst, found that in addition to a coding error:

... their data set failed to include the experience of several Allied nations--Canada, New Zealand, and Australia--that emerged from World War II with high debt but nonetheless posted solid growth. And they had used an odd weighting scheme in which each "episode" of high debt counted the same, whether it occurred during one year of bad growth or seventeen years of good growth.

The result was "undermining the scare stories being used to sell austerity," coupled with the understanding that "the immense suffering that has resulted from these policy errors" was all for naught.

The most visible symbol of austerity economics in U.S. politics has been the congressional sequester. Because of Congress's inability to agree on budget numbers last year, all federal agencies were forced to shave off 5 percent from their budgets. The plan made little sense, not only because of its meat-cleaver approach to budget reduction but also because all sides agreed that the fiscal problems facing the United States derived not from agency spending but from so-called entitlement programs, which were unaffected by the cuts.

Still, right-wingers celebrated the move and continue to do so. In a just-published editorial inThe Wall Street Journal entitled "The Power of 218," the paper's editorial staff termed the sequester to be "a rare policy victory the GOP has extracted from Mr. Obama, and it is squeezing liberal constituencies that depend on federal cash." Such ideological assertions received considerable support in the mainstream media from early reports such as the one that appeared in The Washington Post back in June, entitled "They said the sequester would be scary. Mostly, they were wrong," by David A. Fahrenthold and Lisa Rein. The report--which did not entirely support the headline--compared what the authors believed to be the scare-tactic warnings of the Obama administration regarding the potential results of the sequester to the actual results that materialized in its first few months. They concluded that in many cases, the "cuts ... didn't cause much real-world pain." The authors quoted Robert L. Bixby, executive director of The Concord Coalition, which they described as an organization that "pushes for fiscal responsibility in Washington"--apparently, to The Washington Post, "fiscal responsibility" and "budget cuts" are the same thing--explaining, "The dog barked. But it didn't bite." In other words, all is well--the warnings were much ado about nothing.

This view has been largely reflected in the media's sequester coverage. Indeed, outside of those federal workers who have been furloughed as a result of the sequester, it has not always been easy for those of us who enjoy comfortable incomes to discern any ill effects of its implementation. As it happens, I was directly impacted by the sequester when, on the day it went into effect, my flight was canceled due to a lack of manpower at the airport. I ended up taking a long bus ride, but if I had waited a day, then Congress would have saved me the inconvenience. Congress prevented the furloughs of air traffic controllers and other air travel personnel, which would have affected the less vulnerable and more powerful--indeed, senators and representatives themselves--and replaced the furloughs with $253 million from the FAA's Airport Improvement Program. Thus far, no one appears to have been inconvenienced.

Whenever the mainstream media has focused on the negative effects of the sequester, it has been on the programs favored by conservatives. Cuts to the military have led to complaints by neoconservatives, and former FBI Director Robert Mueller said that sequestration--which will cut about $700 million from the FBI's $8 billion budget and cause furloughs for its 36,000 employees, possibly beginning next month--will move resources from violent crime and white-collar business fraud to ensure that alleged national security threats and cyber-threats get priority.

Still, the impact of the sequester has been slow to materialize in the minds of most Americans. An ABC News/Washington Post poll taken back in May found that 37 percent of those surveyed said they had experienced negative effects from the sequester, up from 25 percent in March.

In fact, almost all Americans have been or are about to be negatively affected by the sequester in significant ways, though this may not be apparent from anecdotal reporting in the mainstream media.

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