Thursday, December 12, 2013
Austerity is bad economics
The budget deal passed the House today. The proposal includes not extending the unemployment benefits for the long term unemployed. This is an outrage. Over 220,000 California workers will lose the benefits that provide food and shelter for their families. Corporate agriculture gets bailed out, the banks get bailed out, but the unemployed get pushed aside. The crisis was caused by finance capital. The unemployed and their families should not have to pay for their crisis.
In economics, austerity is the policy of reducing government spending by cutting social services such as health care, education, food assistance, and other welfare assistance. Governments reduce spending by cutting money for these and similar services. At the federal level, Republicans seek austerity by cutting social Security and Medicare. In the case of state governments in the U.S., public tax money is used for police, fire fighters, park services, nurses, doctors, social workers and health assistants. Austerity programs cut these services.
Austerity policies are counter-productive because reduced government spending increases unemployment and thus cost more money for unemployment insurance, food assistance, and other safety net programs. These cut backs made the recession worse and last longer.
Denying basic survival assistance through unemployment insurance is wrong and it hurts the economy for us all. These cuts, along with the “sequester” and its aftermath will cost some 240,000 jobs. Benefits have already been cut.
While unemployment remains high and economic growth slow, the government should not impose austerity measures that reduce essential programs that benefit the middle and working classes and that shred the safety net for the most vulnerable. Rather, government policy should prioritize investments in job creation, public education and healthcare reform, while raising essential revenues by taxing the large corporations and wealthiest citizens who can afford to pay.
In the current economic crisis, the governments of Ireland, Greece, Italy , Spain and Portugal have implemented austerity programs and cut their budgets. This policy created more unemployment and made the recessions in these countries worse.
Why do we do this?