Prominent economists, politicians, and pundits throw around the term “austerity” as if policies by that name always take the same form. They usually use the term to criticize the concept and its effects by pointing to Europe’s stagnation at the hands of “savage” cuts in government spending. But this mindset ignores the question: Austerity for whom? The answer is especially important if the United States, which has continued to follow in Western Europe’s footsteps with this month’s fiscal-cliff deal, is to learn from the Old World’s mistakes. Raising taxes on the private sector while government continues to gorge itself on...