Thursday, February 28, 2013
Indebted America is in danger of turning into destitute Greece, or so congressional Republicans and conservative commentators have been warning us for years now. For many reasons, this is an absurd comparison -- but it may not always be quite so ridiculous if Washington's advocates of austerity get their way
The Republicans actually want to impose Greek-style budget slashing on the United States. And the federal budget sequestration scheduled to take effect next week could represent the first serious step here toward the kind of fiscal policies that have proved so ruinous not only in Greece -- raising unemployment, destroying hope and encouraging extremism -- but across Europe.
Nearly every day, House Speaker John Boehner or Senate Minority Leader Mitch McConnell -- or Sen. Rand Paul or Rep. Paul Ryan, or almost any other prominent Republican -- insists that the only way to improve the economic prospects of the American people is to impose drastic budget cuts on them. While these Republican leaders don't love the sequester budget only because it cuts too deeply into defense programs, they are eager to impose similar cuts or worse on every domestic function, from health care and education to food safety and infrastructure.
Unwilling as they usually are to name specific cuts, the Republican plans that have emerged lately are indeed similar in scope and impact to those imposed by European central bankers on Greece, Spain, Portugal, Ireland and other beleaguered states across the continent (and imposed by the British government on the United Kingdom itself).
Enacting the same fiscal policies in this country would, presumably, induce the same effects. Yet despite their enthusiasm for extreme austerity the Republican, Tea Party, and assorted media soothsayers almost never want to discuss what has happened in Europe as a result of those same policies. It is not always possible to ignore the unhappy reality of renewed recession, from England to Italy.
Just last weekend, the British were jolted by news that Moody's had downgraded investments in their country's sovereign debt from its traditional AAA status.
Why would the bond-rating agency do something like that? Principally because the miserable budgeting of Tory Prime Minister David Cameron's government has mired the United Kingdom in negative growth,with no prospect of reducing its debt, which keeps growing. So the scheme that was supposed to improve the fiscal outlook for the British has merely lowered their credit rating. That wasn't supposed to happen -- in fact, the austerity plan was designed to preserve Britain's AAA rating -- but it was inevitable as soon as Downing Street chose budget-balancing over growth.
The same downward trajectory can be marked wherever the leaders of dominant Germany have forced austerity plans onto indebted governments.
So damaging has this process become for all of Europe that the Germans finally began suffering the ironic consequences in the last quarter of 2012. Their export-led growth strategies cannot work when their neighbors, reduced to poverty, can no longer purchase German goods. If German exports pick up again this year, it will only happen because customers in the U.S. and China remain exempt from the effects of austerity.
Until now, the United States has escaped the fate of Europe, remaining the "sole bright spot" of steady growth in the global economy because President Obama resisted the fiscal extremism of his Republican adversaries and contrived to ward off recession with necessary spending. Now sequestration, with all of its dire social and economic effects, will provide a taste of what is to come under Republican austerity: a shrunken nation with a dim future.
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