The effect of austerity in Europe has been decidedly detrimental, stifling growth and needlessly prolonging economic pain for the continent’s residents. And in America, many states are doing the exact same thing, slashing spending and laying off workers in an attempt to cope with collapsed revenue.
As Center for American Progress economist Adam Hersh found, such austerity has been counterproductive for states as well. In fact, the states that have cut spending during the recession have higher rates of unemployment, lower rates of growth, and ultimately fewer private sector jobs. In the median “spending cut” state:
– The unemployment rate is 4.1 percentage points higher;
– There are 6 percent fewer private-sector jobs;
– The state economy is growing 2.7 percentage points slower than before the recession.
Despite this evidence, Republicans in Congress and in state legislatures continue to push austerity-like programs.