Paul Krugman shouldn’t feel it is necessary for him to keep proving that austerity measures are harmfull to the economy. Only the fools, including many conservative Republicans, disagree.
Austerity measures take many forms. The following are all austerity measures:
* the Sequester
* the American Taxpayer Relief Act of 2012
* reduced military and NASA spending
* reduced government employment
* reduced state government spending
The Obama administration which blames the Republicans for everything wrong in the economy, is responsible for the first four and the failure of its stimulus programs is in large part responsible for the fifth.
President Obama proposed the Sequester as a political trick to get the Republicans to extend all of his tax and spending programs until after the presidential election. It backfired on him when the Republicans refused to repeal it after the election and despite his demagoguery and gamesmanship by closing the White House to students and impeding air transportation the public blames him equally for the problems sequestration is causing.
It is promoting congressional gridlock.
The American Taxpayer Relief Act of 2012 raised taxes on the upper middle class in most large cities and is reducing their spending. Its two percent increase in withholding taxes was necessary to preserve the integrity of Social Security. Withholding taxes were reduced two years earllier to grow the economy and promote the president’s re-election. He should have sought a different stimulus at that time. Adding reduced deductions to the tax bill only further increased middle class taxes and will reduce their spending.
Reduced military and NASA spending was planned by the Obama administration independently of the Sequester. It has been enhanced by the Sequester. It has taken many forms and has already cost tens of thousands of jobs and left many returning veterans unemployed.
Postal worker layoffs, failing to find jobs for returning veterans who joined the unemployment rolls and excessively reducing government employee workdays to cause maximum inconvenience to the public to try to get them to blame the Republicans are further austerity measures. The Obama administration could have dealt with the Sequester’s two percent spending reduction in a less disruptive way. He turned down Republican offers to give him flexibility.
Reduced state government spending is being caused by requirements that states balance their budgets. The failure of the Obama administration stimulus programs to promote good tax paying jobs has limited the recovery in state revenues.
Furthermore, Obamacare is causing a response similar to an austerity measure. Businessess are holding back capital spending and hiring and looking for ways to avoid paying increased medial care costs. Many individuals fear loss of their jobs or their medical insurance and are afraid to spend.