Contracting the Economy Doesn’t Grow It
by Alan Bedenko (@BuffaloPundit) - posted 7:20 am, December 8, 2011
American Conservatives have been agitating for what amounts to an austerity budget to address the debt and deficit, arguing that the economy will grow if finances are sound. They have – and will continue to – hold the country hostage to their faith-based “tax cuts will solve everything” ideology.
That’s what British Prime Minister David Cameron’s government did, and the results have been an epic disaster. British society is fraying at the edges, mass layoffs have led to strikes, services on which people depend – and for which they pay – are suffering.
The austerity budget is fraying at the edges, amid strikes and protests over layoffs and rising fees. Growth has been slowing, despite Mr. Cameron’s insistence that businesses would pick up the pace when it became clear that the government’s finances were sound. And now Britain looks to be in an unusually poor position to defend its interests in Europe.
Members of the Labour opposition lost no time exploiting what they saw as Mr. Cameron’s weakness on the issue.
“Six weeks ago, he was promising his backbenchers a handbagging for Europe, and now he’s just reduced to hand-wringing,” the Labour leader, Ed Miliband, told Parliament, as his party members whooped their approval. “The problem for Britain is that at that most important European summit for a generation, that matters hugely for businesses up and down the country, the prime minister is simply left on the sidelines.”
So maybe the whole austerity budget, abolishing Medicaid, privatizing Social Security and other Republican payoffs to their ultra-wealthy benefactors might not be what’s best to get the economy moving again.