"Clinton: America’s Debt Problems ‘Can’t Be Solved’ With Austerity"
Former president Bill Clinton urged House Democrats to avoid the push for immediate austerity at a party retreat in Virginia today, pointing to Europe’s failed deficit-cutting experiment that has led to further economic malaise instead of prosperity.
The American economy, bolstered by a major stimulus bill in 2009, has slowly recovered from the Great Recession, but unemployment remains high and growth slower than it should be. The U.S. has already cut more than $2.5 trillion from future deficits, but with the automatic spending cuts brought about by the 2011 debt ceiling deal fast approaching, Clinton pushed Democrats to avoid calls for “conventional austerity measures”:
The debt problem can’t be solved right now by conventional austerity measures, and that’s why Paul Krugman is right when he keeps talking about all these — everybody that’s tried austerity in a time of no growth has wound up cutting revenues even more than they cut spending because you just get into the downward spiral and drag the country back into recession.
European countries that have attempted to spur growth by rapidly reducing their deficits have failed to accomplish either goal and have instead driven their economies back into recession. The United Kingdom’s deficit has hardly gotten smaller despite its austerity efforts and the country is on the verge of a triple-dip recession. Greece and Spain both have unemployment rates above 25 percent. Even Germany, Europe’s largest economy, is on the brink of another recession. The Eurozone as a whole slipped back into recession in November and its unemployment rate is at record highs.
Still, politicians in the United States have failed to heed Europe’s warnings, pursuing deficit reduction instead of job growth. Republicans blocked the American Jobs Act, which economists estimated would have spurred growth and created more than a million jobs, and have instead pursued damaging budget cuts that would have the opposite effect even amid evidence that the original American push for stimulus worked better than the European approach.