What planet is this yokel from?
Apparently these theorists idea of “austerity” is turning down a third helping.
Get government and the “theorists” off our backs and out of our way. Let Dr. Sowell and Dr. Williams lead us out of the wilderness!
“Current fiscal policy is unsustainable”
The money quote for the western economies.
The Alesina school cites a string of cases where fiscal cuts led to robust recovery, and a few booms. Their work cannot be dismissed lightly and exposes the limits of New Keynesian models, which often clash with historical reality and human behaviour.
The textbook cases are: Italy (1970s); Ireland, Denmark and Sweden (1980s); Canada, Spain and the UK (1990s). There were some flops, too: Finland (1970s), Australia, Belgium and Greece (1980s), and Italy (1990s). Context is crucial. Dr Alesina says one clear message comes through from the stack of evidence: "Tax increases are much worse for the economy than spending cuts."
(NB: The case of Sweden was in the early 90s not the 80s!)
A theoretical reason for spending (increaseas or) cuts having less effects than tax cuts is the fact that the latter come into effect much quicker. That was the case during the Great Depression, at least in Sweden, when Sweden was well on its way to recovery well before the Kensyian policies of our Labour party got into effect. (Though, in that case it was not so much tax cuts, as depreciation of the currency due to Sweden leaving the Gold standard that helped to lift the economy).
“known as an “expansionary fiscal contraction”
Sounds vaguely similar to the dreaded “Cranio-Rectal Inversion” and just as fearsome.
Stop spending what you don't earn.
“Former US Treasury Secretary Larry Summers said there is now a one-third chance of a full-blown recession next year in the US. Nobel leaureate Paul Krugman said obscurantists had run amok”
OK if these two say we’re on the wrong track, we must be going in the right direction. Summers and Krugman are the worse ever economists.
Leftist pointy headed elitist psuedo intellectualism mostly.
In 1984 36 task forces and their sub groups lead by 161 of the nations best CEO’s studied the Federal Government for months and concluded that as much as one -third of the Federal Budget consisted of waste, fraud and abuse. Congress of course took no action on the Grace Commission report and its predictions of more than $13Trillion in national debt have now come true
The elimination of waste is never bad economic policy. A government that lives within its means and intrudes on private sector actions as little as possible would be nourishing to enterprise not destructive of it.
Low taxes and low regulation stimulate productive economic activity (and “jobs”) by increasing private investment. (Investment not “consumer demand” creates growth; e.g. Apple Ipad and Iphone had to be created before anyone bought one)
Government debt is nothing more than a hidden tax, another parasitic burden on the national economy.
Bleating hearts of desparate leftists are inventing focus group tested “scenarios” to try and justify their failed status quo. The nation knows they are frauds, only our failed institutions, leftist dominated government and a corrupt and ignorant media establishment continue to manuever to retain power behind stupid theories and empty rhetoric.