“Path To Salvation Doesn’t Pass Through Barbarity”: Bernie Sanders Brings The Anti-Austerity Fight to America
Bernie Sanders is as focused as any member of Congress could be on the struggles of the state he represents, and more generally on the challenges facing working people across the United States.
But that does not mean that the independent senator from Vermont fails to recognize when things are kicking up around the world—especially when those developments have meaning for the fights he is waging in Washington.
So it should come as little surprise that the news from Europe—of a democratic rejection of failed austerity policies—has caught his imagination.
Sanders knows that austerity is not just a European crisis. It threatens America as well. And he is highlighting what his Senate website recognizes as: “An Austerity Backlash.”
The senator is right to be excited that citizens are pushing back.
Sanders says Europe’s voters are sending a message that America’s voters can and should echo: the time has come to reject austerity measures that have unfairly burdened working families, while redistributing ever more wealth upward to millionaires and billionaires.
France on Sunday elected a new president, Socialist François Hollande, who campaigned on a promise to tax the very wealthy in order to free up funds for investment in job creation, education and social services.
Hollande rejects the attacks on unions and cuts to education and public services that have stalled European economies, promising that he will not casually continue the job-killing austerity policies foisted on Europe by bureaucrats and bankers.
There is, Hollande says, “hope that at last austerity is no longer inevitable.”
In Greece, the leader of the Syriza, the radical coalition that as a result of Sunday’s election results has leapt from the sidelines of politics to status as the nation’s second-largest party, is even more blunt in his rejection of austerity.
“We believe the path of salvation doesn’t pass through barbarity of austerity measures,” argues Syriza’s Alexis Tsipras.
Hollande and Tsipras are different players, with different styles and different policies.
Yet, their dramatic shows of strength in Sunday’s voting, along with similarly strong results for critics of austerity running in German state elections and Italian local elections, suggests that voters are fed up with the austerity fantasy that says the best response to tough times is a combination of tax cuts for the rich and pay and benefits for the workers.
What should Americans make of the results?
Sanders knows. The independent senator from Vermont, who has led the fight to preserve education, healthcare and social services funding in the face of proposals by House Budget Committee Chair Paul Ryan and his fellow proponents of an American austerity agenda, says the message sent by European voters can and should be echoed by American voters.
Yes, of course, the accent will be different, as will specific concerns and proposals. America is different from Germany, Greece and France.
But the threat posed by failed and dysfunctional policies is the same.
“In the United States and around the world, the middle class is in steep decline while the wealthy and large corporations are doing phenomenally well,” says Sanders. “The message sent by voters in France and other European countries, which I believe will be echoed here in the United States, is that the wealthy and large corporations are going to have to experience some austerity also and that that burden cannot solely fall on working families.”
Sanders is making the connections, recognizing the importance of a democratic push-back against policies that are as cruel as they are economically unsound.
“In the United States, where corporate profits are soaring and the gap between the rich and everybody else is growing wider, we must end corporate tax loopholes and start making the wealthy pay their fair share of taxes,” the senator explains. “At the same time, we must protect Social Security, Medicare and Medicaid. Austerity, yes, but for millionaires and billionaires, not the working families of this country.”
Sander is, of course, correct.
Let’s just hope that his message is echoed by other leaders in the United States.
Just as austerity is wrong for Europe, it’s wrong for the United States.
By: John Nichols, The Nation, May 7, 2012
“Wasting Our Minds”: A Young Mind Is A Terrible Thing To Waste
In Spain, the unemployment rate among workers under 25 is more than 50 percent. In Ireland almost a third of the young are unemployed. Here in America, youth unemployment is “only” 16.5 percent, which is still terrible — but things could be worse.
And sure enough, many politicians are doing all they can to guarantee that things will, in fact, get worse. We’ve been hearing a lot about the war on women, which is real enough. But there’s also a war on the young, which is just as real even if it’s better disguised. And it’s doing immense harm, not just to the young, but to the nation’s future.
Let’s start with some advice Mitt Romney gave to college students during an appearance last week. After denouncing President Obama’s “divisiveness,” the candidate told his audience, “Take a shot, go for it, take a risk, get the education, borrow money if you have to from your parents, start a business.”
The first thing you notice here is, of course, the Romney touch — the distinctive lack of empathy for those who weren’t born into affluent families, who can’t rely on the Bank of Mom and Dad to finance their ambitions. But the rest of the remark is just as bad in its own way.
I mean, “get the education”? And pay for it how? Tuition at public colleges and universities has soared, in part thanks to sharp reductions in state aid. Mr. Romney isn’t proposing anything that would fix that; he is, however, a strong supporter of the Ryan budget plan, which would drastically cut federal student aid, causing roughly a million students to lose their Pell grants.
So how, exactly, are young people from cash-strapped families supposed to “get the education”? Back in March Mr. Romney had the answer: Find the college “that has a little lower price where you can get a good education.” Good luck with that. But I guess it’s divisive to point out that Mr. Romney’s prescriptions are useless for Americans who weren’t born with his advantages.
There is, however, a larger issue: even if students do manage, somehow, to “get the education,” which they do all too often by incurring a lot of debt, they’ll be graduating into an economy that doesn’t seem to want them.
You’ve probably heard lots about how workers with college degrees are faring better in this slump than those with only a high school education, which is true. But the story is far less encouraging if you focus not on middle-aged Americans with degrees but on recent graduates. Unemployment among recent graduates has soared; so has part-time work, presumably reflecting the inability of graduates to find full-time jobs. Perhaps most telling, earnings have plunged even among those graduates working full time — a sign that many have been forced to take jobs that make no use of their education.
College graduates, then, are taking it on the chin thanks to the weak economy. And research tells us that the price isn’t temporary: students who graduate into a bad economy never recover the lost ground. Instead, their earnings are depressed for life.
What the young need most of all, then, is a better job market. People like Mr. Romney claim that they have the recipe for job creation: slash taxes on corporations and the rich, slash spending on public services and the poor. But we now have plenty of evidence on how these policies actually work in a depressed economy — and they clearly destroy jobs rather than create them.
For as you look at the economic devastation in Europe, you should bear in mind that some of the countries experiencing the worst devastation have been doing everything American conservatives say we should do here. Not long ago, conservatives gushed over Ireland’s economic policies, especially its low corporate tax rate; the Heritage Foundation used to give it higher marks for “economic freedom” than any other Western nation. When things went bad, Ireland once again received lavish praise, this time for its harsh spending cuts, which were supposed to inspire confidence and lead to quick recovery.
And now, as I said, almost a third of Ireland’s young can’t find jobs.
What should we do to help America’s young? Basically, the opposite of what Mr. Romney and his friends want. We should be expanding student aid, not slashing it. And we should reverse the de facto austerity policies that are holding back the U.S. economy — the unprecedented cutbacks at the state and local level, which have been hitting education especially hard.
Yes, such a policy reversal would cost money. But refusing to spend that money is foolish and shortsighted even in purely fiscal terms. Remember, the young aren’t just America’s future; they’re the future of the tax base, too.
A mind is a terrible thing to waste; wasting the minds of a whole generation is even more terrible. Let’s stop doing it.
By: Paul Krugman, Op-Ed Columnist, The New York Times, April 29, 2012
“The Land Of The Not-Free”: Meet Mitt Romney, The Real European
An odd thing happened during Mitt Romney’s victory-lap speech after Tuesday’s Republican primaries: He didn’t once mention the word “Europe.”
The absence was jarring, because Romney’s claim that President Obama is dragging the United States toward a loathsome European-style “social welfare” future has been a staple of the former Massachusetts governor’s shtick ever since he started campaigning in earnest.
It’s always been an easy line for him: Europe, Romney’s audience understands, is the land of the not-free. The continent gave birth to Karl Marx, for crying out loud! Every now and then, socialist political parties actually take power!
But there is a big problem with Romney’s formulation. For the last year or two, Europe has been implementing, in real time, exactly the policies that Romney and congressional Republicans fervently believe are the best strategy for boosting economic growth. It’s called “austerity,” and it means cutting deficits, slashing spending, and chipping away at all those goodies the social welfare state provides.
And guess what? It’s not working. Compared with the United States, Europe is in shambles. Unemployment is rising across the continent. Just this week, the United Kingdom, which has pursued an austerity regime so severe that it makes House Republicans drool with lust, slipped back into recession. In France, the socialist candidate for president (and likely winner), François Hollande, has been campaigning against austerity. Italy’s prime minister, Mario Monti, is expressing qualms. The latest news out of Brussels, according to the Daily Telegraph, suggests “a major shift in economic strategy” as fears spread “that excessive fiscal tightening will inflict unnecessary damage on a string of eurozone countries.”
The evidence keeps amassing. Maybe, just maybe, John Maynard Keynes was right: Cutting government spending in the face of a weak economy is a recipe for further decline. In a startling turnabout, political leaders all over Europe are questioning the merits of austerity and calling for more stimulative policies.
You can see the problem Romney faces, and why he might suddenly be reluctant to utter the word “Europe.” The facts are uncomfortable: Under Obama, the United States has recovered more quickly from the Great Recession than has Europe. Economic growth is steadier, and unemployment is falling faster. But if Romney wins the White House, bringing along with him Republican majorities in both the Senate and the House, he will have the power to do exactly what he says he wants to do: slash government spending and cut the deficit.
It’s a plan that runs the very real risk of sabotaging the economic recovery. It’s a plan, in other words, that would make the U.S. just like Europe.
Romney’s efforts to tar Obama as a fifth columnist for French-accented Really Big Government have been unrelenting. In December, he told voters in Iowa that Obama’s polices “were making us like Europe,” and “I don’t want Europe here.” In January, after winning the New Hampshire primary, he lambasted Obama for wanting “to turn America into a European-style entitlement society.” Just a few days ago, he explained to Fox News that the conservative base would rally behind his candidacy, because “President Obama has taken America in such a different course than we have ever gone as a nation before. We are becoming far more like a European social-welfare state, and people don’t want to see that.”
Never mind that by historical standards Obama’s efforts to strengthen the American safety net do not come close to the transformational efforts of presidents like Franklin Roosevelt and Lyndon Johnson, making Romney’s assertion that Obama is taking America on “such a different course than we have ever gone as a nation before” transparently ridiculous. If anyone running for president this year in the United States is a pioneer in European-style liberalism, it’s got to be Romney, the first governor to preside over the creation of a statewide universal healthcare plan. (And for a guy who seems to despise Europe so much, Romney sure seems to enjoy vacationing in France.)
But whatever. Romney’s Europe-bashing rhetoric serves multiple purposes. It labels Obama as something different, a “foreigner,” un-American. It also directly appeals to conservative concerns that the social welfare state is unaffordable. In this vein, unless governments everywhere tighten their belts, balance their budgets and get their ships in order, we’re all headed down the hopeless path of Greece, doomed to bankruptcy and social chaos.
Most importantly, Romney’s opposition to European-style Big Government stakes an implicit position on the great economic debate of our time: How best to spur economic growth?
The stances of the two main camps have been clear for years and endlessly debated by economists and pundits. The pro-stimulus, Keynesian argument holds that the problem afflicting stagnant economies all over the world is a lack of demand. When everyone is worried about their economic future, everyone simultaneously tightens their belt, and the capitalist machine stops in its tracks. Since no one is willing to buy anything, companies can’t sell their goods and services and respond by laying off their employees, and that further exacerbates the overall problem. Under such constraints, only the government has the power to step in and stimulate demand. Once the economy is growing strongly and consistently, only then do you look for ways to balance the budget — a task that becomes much easier when tax revenues are booming again.
The opposing camp, now commonly referred to as “Austerians,” believes the problem isn’t a lack of demand, but a lack of confidence. People are afraid to invest and buy and take risks because they’re worried that high deficits inevitably lead to high taxes, or high interest rates, or general fiscal chaos (or all of the above). And they’re going to hunker down until they’re sure that governments intend to act responsibly, and live within their means.
The Austerian camp’s stance translated into one of the most delightfully mindbendingly oxymoronic proposals to enter the economic policy parlance in years: “expansionary fiscal contraction.” Cutting government spending will boost confidence, which will lead to growth! To get big, one must first get small.
It was all the rage two years ago. Today, not so much. The problem with expansionary fiscal contraction is that when you try it at a time when the economy is stagnant or recessionary, you run a real risk of exacerbating the problem you are trying to cure. Slashing government spending subtracts demand from the economy. Growth slows, tax revenues fall, and suddenly the government has even less to spend, which subtracts even more demand from the economy.
And that’s exactly what appears to be happening in Europe — in countries such as Greece, Italy, Spain and France, and perhaps most intriguingly, in the United Kingdom, where David Cameron’s new conservative government pursued austerity with a vengeance. From the outset, a clamor of voices warned that the risks were huge, and so far, their worries have been validated. On Monday, the U.K. registered its second quarter of economic contraction, the rule-of-thumb definition for a recession.
It’s very rare that one gets a real-time demonstration of how two different economic policies compare, but the numbers are hard to argue with: In the “euro area,” where austerity has reigned, GDP growth has declined for each of the last four quarters. In the U.S. it has risen. In the euro area, unemployment has been rising for a year. In the U.S. , it’s been falling. As Felix Salmon observes, when one compares the United States, the U.K and the euro area, “the tougher and more credible the austerity, the worse the GDP performance.”
The trend lines are far too obvious to ignore, and they have sparked a political counter-reaction that appears to have reached critical mass this week. In Italy, France, Spain and the Netherlands, austerity is suddenly out of favor.
Meanwhile, the United States, despite the best efforts of Republicans, never pursued austerity as devoutly as Europe. Which is not to say the U.S. hasn’t tightened its belt at all. Perhaps the most stunning counter-argument to Romney’s accusation that Obama is pushing for a government-centered European-style government can be seen in the decline in the size of the public sector under Obama: During his presidency, employment in the public sector — local, state and federal government — has fallen by almost 600,000 jobs. In comparison, Bill Clinton added over 600,000 and George Bush added 800,000. As Paul Krugman points out, if Obama’s administration had added public sector jobs at the same rate as George Bush, unemployment would currently stand around 7 percent.
But even with those headwinds blowing against it, the U.S. has done surprisingly well. The first guess at GDP growth for the second quarter of 2012, due out Friday morning, is likely to peg growth at around 3 percent. Meanwhile, the most recently available statistics for the euro area show it contracting.
Which leads us back to the all-important question: What happens if Romney wins the election? The chances are good that if he is victorious, he will bring in Republican control of Congress along with him. Anything budget-related can be passed using the congressional technique known as “reconciliation,” which means Senate Democrats won’t be able to filibuster. He’ll be able to do what he wants.
Once upon a time, Mitt Romney supported stimulus spending to boost the economy. But now he sings a different tune. He has endorsed Paul Ryan’s budget, — “It’s an excellent piece of work, and very much needed” — which would combine huge cuts to social welfare programs with dramatic tax cuts for the wealthy — an austerity program directly targeted at the poor. Romney’s speeches are generally devoid of specific policy proposals, but he’s fond of encapsulating his overall economic strategy with the three Tea Party-friendly words “cut,” “cap” and “balance” — the simplest definition of austerity one could ask for. And as he said in Philadelphia on April 12, “The economy is struggling because government is too big, and we have to bring it down to size.”
All together, everything points to a plan for turbo-boosted austerity. That’s exactly the model that Europe has tried and is now finding wanting. And it’s exactly the wrong medicine for a country in which economic growth is still very vulnerable and unemployment is still high.
Wanna be like Europe? Elect Romney.
By: Andrew Leonard, Salon, April 27, 2012
What Ails Europe?: Republicans Have No Idea What They’re Talking About
Lisbon.
Things are terrible here, as unemployment soars past 13 percent. Things are even worse in Greece, Ireland, and arguably in Spain, and Europe as a whole appears to be sliding back into recession.
Why has Europe become the sick man of the world economy? Everyone knows the answer. Unfortunately, most of what people know isn’t true — and false stories about European woes are warping our economic discourse.
Read an opinion piece about Europe — or, all too often, a supposedly factual news report — and you’ll probably encounter one of two stories, which I think of as the Republican narrative and the German narrative. Neither story fits the facts.
The Republican story — it’s one of the central themes of Mitt Romney’s campaign — is that Europe is in trouble because it has done too much to help the poor and unlucky, that we’re watching the death throes of the welfare state. This story is, by the way, a perennial right-wing favorite: back in 1991, when Sweden was suffering from a banking crisis brought on by deregulation (sound familiar?), the Cato Institute published a triumphant report on how this proved the failure of the whole welfare state model.
Did I mention that Sweden, which still has a very generous welfare state, is currently a star performer, with economic growth faster than that of any other wealthy nation?
But let’s do this systematically. Look at the 15 European nations currently using the euro (leaving Malta and Cyprus aside), and rank them by the percentage of G.D.P. they spent on social programs before the crisis. Do the troubled Gipsi nations (Greece, Ireland, Portugal, Spain, Italy) stand out for having unusually large welfare states? No, they don’t; only Italy was in the top five, and even so its welfare state was smaller than Germany’s.
So excessively large welfare states didn’t cause the troubles.
Next up, the German story, which is that it’s all about fiscal irresponsibility. This story seems to fit Greece, but nobody else. Italy ran deficits in the years before the crisis, but they were only slightly larger than Germany’s (Italy’s large debt is a legacy from irresponsible policies many years ago). Portugal’s deficits were significantly smaller, while Spain and Ireland actually ran surpluses.
Oh, and countries that aren’t on the euro seem able to run large deficits and carry large debts without facing any crises. Britain and the United States can borrow long-term at interest rates of around 2 percent; Japan, which is far more deeply in debt than any country in Europe, Greece included, pays only 1 percent.
In other words, the Hellenization of our economic discourse, in which we’re all just a year or two of deficits from becoming another Greece, is completely off base.
So what does ail Europe? The truth is that the story is mostly monetary. By introducing a single currency without the institutions needed to make that currency work, Europe effectively reinvented the defects of the gold standard — defects that played a major role in causing and perpetuating the Great Depression.
More specifically, the creation of the euro fostered a false sense of security among private investors, unleashing huge, unsustainable flows of capital into nations all around Europe’s periphery. As a consequence of these inflows, costs and prices rose, manufacturing became uncompetitive, and nations that had roughly balanced trade in 1999 began running large trade deficits instead. Then the music stopped.
If the peripheral nations still had their own currencies, they could and would use devaluation to quickly restore competitiveness. But they don’t, which means that they are in for a long period of mass unemployment and slow, grinding deflation. Their debt crises are mainly a byproduct of this sad prospect, because depressed economies lead to budget deficits and deflation magnifies the burden of debt.
Now, understanding the nature of Europe’s troubles offers only limited benefits to the Europeans themselves. The afflicted nations, in particular, have nothing but bad choices: either they suffer the pains of deflation or they take the drastic step of leaving the euro, which won’t be politically feasible until or unless all else fails (a point Greece seems to be approaching). Germany could help by reversing its own austerity policies and accepting higher inflation, but it won’t.
For the rest of us, however, getting Europe right makes a huge difference, because false stories about Europe are being used to push policies that would be cruel, destructive, or both. The next time you hear people invoking the European example to demand that we destroy our social safety net or slash spending in the face of a deeply depressed economy, here’s what you need to know: they have no idea what they’re talking about.
By: Paul Krugman, Op-Ed Columnist, The New York Times, February 26, 2012
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