Last night on Hannity, I had a discussion with Democratic strategist Joe Trippi who seemed to imply that Europe's economic blight was the result of austerity measures put in place by some countries to help rein in debts.
I'd like to point my buddy Joe and other liberals to a recent report put together by Republicans on the Joint Economic Committee. In the report they examined data from respected economists on the impact of spending cuts on economies similar to ours in the United States. Here was their conclusion, as reported by the National Review:
Time and time again, economic studies have shown that countries that reduce their government deficits through spending cuts — rather than tax increases — can boost economic growth and job creation even in the short term.
Respected economists found 21 instances between 1970 and 2007 in which ten developed countries successfully reduced their debt-to-GDP ratio by 4.5 percentage points or more by relying predominantly or entirely on spending cuts. Countries that increased taxes were much less successful. When government debt shrank through spending cuts, jobs grew.
Canada, Sweden, New Zealand are all examples of countries which have accomplished this, and as a result are growing.
On the flip side you have countries like Portugal, Italy, Greece, Spain, and even Ireland and Great Britain. Government spending grew in these nations, “from an average of 43.2% of GDP in 2007 to 52.6% by 2010,” according to a report in Investor's Business Daily. When it became clear that these countries could not sustain these outrageous levels of spending, they began to cut back. This is why Joe Trippi, Paul Krugman and others will now say that the problem is austerity when they don't tell you that the original problem was an explosion in government spending that was unsustainable. Ultimately this IBD report by Alan Reynolds of the Cato Institute concluded something similar to the report compiled by Republicans on the Joint Economic Committee:
What works, these successful economies discovered, is (1) to prevent government spending from growing faster than the private economy that supports it, and (2) to reduce rather than increase the highest, most damaging tax rates.
I'm not saying that cuts like sequestration are the answer, but we are in need of some serious budget, tax and entitlement reform. However, we have a president who is pushing for higher taxes, more government spending and never ever plans to balance the budget. Just yesterday his White House senior advisor reiterated that Obama's impending budget (2 months late) will not balance. Meanwhile, if you come up with a plan to balance the budget, reform entitlements and yet still increase spending, you are engaging in “social Darwinism” and want to throw granny off a cliff.