The bogus "austerity" lie

[grapejelly]

http://www.nytimes.com/2010/06/29/bu...FLrfPBiSKjas8g

Ireland is said to be a good example of the value of "austerity."

Rather than being rewarded for its actions, though, Ireland is being penalized. Its downturn has certainly been sharper than if the government had spent more to keep people working. Lacking stimulus money, the Irish economy shrank 7.1 percent last year and remains in recession.
Joblessness in this country of 4.5 million is above 13 percent, and the ranks of the long-term unemployed — those out of work for a year or more — have more than doubled, to 5.3 percent.
Now, the Irish are being warned of more pain to come.

Fact is, austerity is really a codeword for:


1. RAISE TAXES
2. Don't really cut the role of government.
3. Inflate by printing money


None of this is good. All of it is bad. I'm sick of hearing about these lies.

[ViC78]

Re: The bogus "austerity" lie

Austerity is a code word for -

1. Cutting Public Spending.

Ireland: Government to impose draconian austerity measures with opposition support

By Steve James
16 March 2009

Ireland's prime minister (Taoiseach), Brian Cowen, has warned of more savage cuts than expected in the emergency budget scheduled for April 7.


The government's emergency budget will impose devastating cuts in public spending, while raising large additional amounts through taxes on working people. These cuts will be in addition to the €2 billion pay cut already levied on public service workers via the "pension levy," and the €2 billion cuts in spending already announced for the 2009 budget.

2. Raising taxes on the middle class and lower classes -

Announcing the proposal, Finance Minister Brian Lenihan made clear that the new taxes will be levied on the lowest-paying workers. Currently, 40 percent of the workforce earns wages below the tax threshold. But in future, according to Lenihan, "Everybody will have to pay something."

http://www.wsws.org/articles/2009/ma...irel-m16.shtml

3. Debt servicing of the rentiers.

Politicians here have raised taxes and cut salaries for nurses, professors and other public workers by up to 20 percent. About 30 billion euros ($37 billion) is being poured into zombie banks like Anglo Irish, which was nationalized after lavishing loans on developers.

BTW, Ireland was running budget surpluses prior to the downturn.

The budget went from surpluses in 2006 and 2007 to a staggering deficit of 14.3 percent of gross domestic product last year — worse than Greece. It continues to deteriorate. Drained of cash after an American-style housing boom went bust, Ireland has had to borrow billions; its once ultralow debt could rise to 77 percent of G.D.P. this year.

[bpr]

Re: The bogus "austerity" lie

Austerity is a code word for -

1. Cutting Public Spending.
2. Raising taxes on the middle class and lower classes -


http://www.wsws.org/articles/2009/ma...irel-m16.shtml

3. Debt servicing of the rentiers.

You left out privatizing state assets.

[chr5648]

Re: The bogus "austerity" lie

If they never got into debt with all these 'programs' you would never need austerity.

On an individual note, I don't get into debt or spend what I don't have to pay with, so that means I don't have to do 'austerity'. This is the concept that has been lost.

[World Traveler]

Re: The bogus "austerity" lie

As a middle class American citizen you will be impacted when the U.S. imposes "austerity" on its citizens, no matter how prudently you have managed your personal affairs (as I have also - no debt, own house, have savings, etc.).

When state and U.S. gov't really start laying off professional workers, there will be a lot more competition for jobs in the private sector, a private sector that minimally will not be creating many new jobs and most likely will also be laying off people, due to poorer consumers and lack of demand. And if, as an individual this does not affect you, it will likely affect some that you care about - children, siblings, friends.

If you're older and collecting Social Security, it will likely be means-tested in an "austere" future, no matter how much you paid into the system. If you're younger, you will will still be forced to pay into some type of gov't retirement system - even Republicans who tried to privatize Social Security in 2005 did not plan to abolish the payroll tax, they just wanted to privatize its management.

Crime rates will likely go up due to proliferation of guns in the U.S. and fact that states will have less money to spend on prison systems. etc., etc.

Bottom line: an "autere" America will adversely affect most of its citizens, except the very richest at the top.

[unlucky]

Re: The bogus "austerity" lie

Be wary however of those who claim that we can avoid austerity and live happily ever after just by canceling debt and forcing the rentiers to pay.

In order to cancel debts, our economies first need to learn how to survive without massive on-going borrowing. That means pain, lots of it. In most advanced economies it will mean a combination of spending cuts and tax increases (as well as curbs on the activities of the private financial sector).

So here's my programme for government: cut spending, increase taxes, and cancel debts (but don't tell anyone about the last one until the first two have been accomplished). How many votes do you think I'll get?

[ViC78]

Re: The bogus "austerity" lie

If they never got into debt with all these 'programs' you would never need austerity.

You probably missed the part that Ireland was running budget surpluses before the housing bubble burst.

[Milton Kuo]

Re: The bogus "austerity" lie

You probably missed the part that Ireland was running budget surpluses before the housing bubble burst.

The budget surpluses were fictitious just as profits were fictitious at subprime lenders and various Wall Street institutions.

[grapejelly]

Re: The bogus "austerity" lie

these "draconian cuts" are fictitious. They may cut back, but only to levels of a few years ago. They are not going to have real cutbacks because that would mean the game is over for the current regime.

The first thing to do is close the libraries, stop maintaining the roads, lay off people at the DMV counter...these are cuts that hurt people quickly and don't cost that much but get the populace all riled up.

It's a pure and total joke.

Show me ANY "austerity" that lowers taxes and really slashes spending, and I'll show you an economy that will mend quite nicely.

No, instead we get this bogus lie, which serves TPTB nicely. It's ALL about protecting the banks and the bondholders. Full stop.

[unlucky]

Re: The bogus "austerity" lie

No, instead we get this bogus lie, which serves TPTB nicely. It's ALL about protecting the banks and the bondholders. Full stop.

I agree with your point, but to be fair to the government of Ireland, it's difficult to see how a small country can act differently without external help. For the time being, they need to be able to borrow; the alternative is to stop paying the wages of the police and other public servants. To borrow from the markets they need to at least pretend they are going to pay everything back - no default or re-structuring. Unfortunately the IMF and others such as the EU are no help - they are taking the same line with e.g. Greece; they will provide funding but there will be no re-structuring.

For the time being it's the small nations that are stuck in this mess. I bet the IMF will be singing from a different hymn sheet once a large and influential nation (e.g, one that is a guarantor of lots of big banks, rather than merely a debtor) gets into trouble.