There’s austerity in Europe, all right — of the taxing sort
The austerity debate is back, with American liberals pointing to shrinking European economies as evidence against the wisdom of cutting government spending here.
Typical is this argument from a column by the New York Times’ Paul Krugman last month: “Europe has had several years of experience with harsh austerity programs, and the results are exactly what students of history told you would happen: such programs push depressed economies even deeper into depression.”
Indeed, nine of the European Union’s 27 member-countries were in technical recession by the end of 2011 or the first quarter of 2012 (not all countries report first-quarter data at the same time).
There’s just one problem: There have been no such austerity programs, at least not of the type Krugman and other liberals warn against.
In five of the nine recessionary countries, governments cut spending in 2011. In four, they didn’t. There were another three European countries in which public spending fell without triggering a recession.
Britain, considered a poster child for the hazards of austerity, hasn’t cut spending at all. It did, however, raise the top marginal tax rate: by 10 percentage points in 2010 and an additional 1 point last year.
In fact, the EU’s recessionary countries were just as likely to have raised taxes in 2011 as to have cut spending.
The hardest-hit countries — Greece, Portugal and Spain — did both. These countries are the only ones in Europe that can truthfully say they’ve embraced austerity. Unless, that is, you count Iceland, which returned to robust growth last year despite cutting spending by more than 5 percent.
Yet, in both Portugal and Spain, the tax hikes were larger, percentage-wise, than the spending cuts. So, who’s to say the changes in spending, rather than taxes, are to blame?
What about Ireland, you may ask. Hasn’t the famed “Celtic Tiger” of the 1990s and early 2000s been declawed during the past few years?
Ireland has dipped into recession, and it did cut spending by a whopping 27 percent last year. Of course, it increased spending by an even more whopping 33 percent in 2010 — leaving public expenditures just slightly below the levels in the previous couple of years.
What has changed significantly in Ireland are tax rates. Spending was 1 percent lower in 2011 than in 2008, but the top marginal tax rate — the rate applied to an earner’s next euro of income — rose 17 percent. Again, why should we accept it’s the spending, not the taxing, that has pushed Ireland’s economy down?
One more thing you won’t hear from the anti-austerity crowd is that the tax hikes have not had their intended effects. Britain, for instance, is lowering its top tax rate again after no more than two-fifths of the projected new revenues materialized. All that the higher rate achieved, treasury chief George Osborne noted, was for high-earning Britons to move their money around and change their behavior to avoid the higher rates.
These distortions — which themselves could explain some of the U.K. economy’s troubles — weren’t worth the new revenues that were realized, Osborne explained.
That’s one more thing for Americans to keep in mind as they hear about the policies we should or shouldn’t import from Europe.
– By Kyle Wingfield
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561 comments Add your comment
The Fresh Prince of Bill Ayers
May 5th, 2012
10:05 am
“If it’s about the lives of my soldiers at stake, I’d go through hell with a gasoline can.”[10]
Hmm not the kind of “hold your hand and sing Kumbaya” fellow that libs don’t like. But surely a decisive kind of guy. Heck, he might have even had enough spine to make the Kill Bin Laden call like our fearless dictator did….
MarkV
May 5th, 2012
10:05 am
md @9:54 am: “MarkV…..a 2009 proposed budget does not equal 2010 actual spending”
md,
If you have data showing that instead of the proposed €4bn 2010 cuts in public spending there was a 33% increase in public spending, please show them.
Lil' Barry Blowhard
May 5th, 2012
10:06 am
KYLE: “Iceland, which returned to robust growth last year despite cutting spending by more than 5 percent.”
The GDP in Iceland expanded 2.7% in the fourth quarter of 2011 over the same quarter, previous year (and averaged just over 3% for 2011). http://www.tradingeconomics.com/iceland/gdp-growth-annual
The U.S. GDP expanded at 3.0% in Q4 2011. Gee, why doesn’t Kyle consider the U.S. expansion “robust growth” like Iceland? Hmmmm….. makes you wonder.
Iceland also experienced 10 straight quarters of negative GDP. The U.S. did not – thanks effect of the bailout and TARP.
Love me some Reagan
May 5th, 2012
10:07 am
“No. As always, you would be wrong about that meat.”
That question was for Tiberius the mouth runner
Love me some Reagan
May 5th, 2012
10:08 am
Prince
Did you retire on his own or was he allowed to accept a lessor plea and retire?
He did not retire on his own free well……..
Period, plan and simple
Kyle’s king blogger Tiberius was wrong yet again……. and you are also welcome to be wrong as well as huff and puff
Love me some Reagan
May 5th, 2012
10:09 am
“Did he retire”……………… Not “Did you retire”
zebra
May 5th, 2012
10:11 am
Clearly the way to fix our Cocaine George broken economy is to cut spending , thereby reducing the amount of money in the economy, and reducing gov’t employment thereby reducing demand further.
The obvious solution is to give Paris Hilton more money to invest in India and China. What could go wrong?
GT
May 5th, 2012
10:12 am
I am with The Kid. I get sick of these guys waving the flag, Bush, Cheney, when all they are for is individuals. They really don’t want a government, except to protect their individual wealth, 90 percent of the country can be damned they are not part of it. Then they wave the Bible when their image of God is themselves. Richard Nixon started this China thing, then G. Bush the first became the ambassador to China. If we can’t have slaves in the United States we can have them in China, pay them over there and take food out of the mouths of Americans. Obviously there has been private welfare in corporate communities for decades, and then the trophy wife came along and they married cheap labor across the borders of our country leaving the American labor to die. Yet the country is in a wad about illegal immigrants that at lease keep the money here and have a American lifestyle and hope. Both policies, the Chinese and the illegal immigration cut into the well being of America. They know it but they don’t care. I cannot figure out what they think this road is leading to. The 1% have mentally left this country and they need to so we can replace the private sector in this country with people who are Americans again. We need to stop protecting these people, stop allowing them our market and then letting them carry it off to a third world. Free enterprise is about competition, lets have some. Lets stop honoring intellectual property that is taking its money and jobs else where. Lets stop bailing weak robber baron banks out so they can screw us again. Like integrated baseball lets let the rest of society into the game of free enterprise. Too big to fail doesn’t put the best product on the market, it does exactly the opposite. We in a fix and the poor didn’t get us there, which they had that kind of power, but in this dog eat dog world we have created the power is leaving the country with our money.
Michael H. Smith
May 5th, 2012
10:14 am
The embarrassment and lack of knowledge is yours not mine.
But here’s a question for the others about a stupid as you who think this is a Democracy and not a Representative Republic:
Is there a “individual constitutional right” to vote “to elect” the President of the United States in a Federal election?
The Fresh Prince of Bill Ayers
May 5th, 2012
10:15 am
Love me some Reagan
May 5th, 2012
10:08 am
Prince
Did you retire on his own or was he allowed to accept a lessor plea and retire?
I could really give a flying intercourse if he retired or not. What’s that got to do with the price of cumquats in Botswana anyway?
Michael H. Smith
May 5th, 2012
10:20 am
Is there a “individual constitutional right” to vote “to elect” the President of the United States in a Federal election?
Looks like no one is showing up to claim their – one men every one vote must count in a popular election – Democracy?!
md
May 5th, 2012
10:24 am
One is welcome to peruse the available information that indicates Ireland has increased spending year over year……as for the 33%, that is Kyle’s number, you can take that up with him…..but the records clearly indicate that spending has not decreased.
http://budget.gov.ie/Budgets/2012/2012.aspx
Mary Elizabeth
May 5th, 2012
10:25 am
The Paul Krugman link provided, in the article above, was of the column Krugman wrote on April 15, 2012 for the New York Times. Below is the link to the column Krugman wrote for the New York Times on April 29, 2012 (It is also published in today’s AJC.) which describes Ireland’s financial situation, as Krugman interprets it. Krugman has been “spot on” in most of his assessments, and he was the first columnist to recognize, and to publish, that Republicans had deliberately run up the deficit during the 2000s in order to have a “reason” to cut into entitlements, which has been their passionate agenda since the FDR era. The 2000s were the “now or never” time for conservatives to fulfill that long-held entitlement cutting mission. (See Krugman’s “The Bankruptcy Boys,” New York Times, 2/22/2010.)
I believe Krugman is correct in his assessment of the direction our nation should take, now, regarding tax cuts and spending. It is worthy to note that Krugman was awarded a Nobel Prize in Economics.
From today’s column, in the AJC, by Paul Krugman:
“For as you look at the economic devastation in Europe, you should bear in mind that some of the countries experiencing the worst devastation have been doing everything American conservatives say we should do here. Not long ago, conservatives gushed over Ireland’s economic policies, especially its low corporate tax rate; the Heritage Foundation used to give it higher marks for ‘economic freedom’ than any other Western nation. When things went bad, Ireland once again received lavish praise, this time for its harsh spending cuts, which were supposed to inspire confidence and lead to quick recovery.
And now, as I said, almost a third of Ireland’s young can’t find jobs.
What should we do to help America’s young? Basically, the opposite of what Mr. Romney and his friends want.”
http://www.nytimes.com/2012/04/30/opinion/krugman-wasting-our-minds.html?partner=rssnyt&emc=rss
Samantha
May 5th, 2012
10:25 am
The problem with socialism either of the european kind of of the more cloaked Obama variety is not that the slogans don’t sound good, that the appeal to “fairness” an “equality” does not resonate. The problem is that IT DOES NOT WORK.
From each according to his abilities to each according to his needs has failed conclusively. Obama and his progressive buddies can dress up that failure anyway they want but its utter failure to usher in a more productive, more affluent, more just society is evident.
The Fresh Prince of Bill Ayers
May 5th, 2012
10:27 am
May 5th, 2012
10:12 am
I am with The Kid. I get sick of these guys waving the flag, Bush, Cheney, when all they are for is individuals. May 5th, 2012
10:12 am
Use your brain man. Both parties are bought and paid for by corporate america. Oblamer appoints Immelt as jobs cszar? Really? The only way to protect the average Joe is to cut off lobbyists from access to politicians and impose term limits. Until then, all of us can p!$$ and moan about the other party while we watch both get more brazen with their shady dealings, and get propped up by the media as being the next great thing.
david green
May 5th, 2012
10:27 am
We’ve been here before Kyle. During the 1920’s 23 – 29 a republican held the presidency and allowed Wall Street to run out of control until it imploded in 1929; under Herbert Hoover {another republican} who followed conservative policy to cut cut cut and focused on balancing the budget making the resulting great depression worse and deeper. To the point that he was run out of office and FDR was given a mandate to finely fix the problems that conservative economic policy always leads too. The fact is Kyle that in the short run conservative economic policy leads to a boom that enriches the few 1% at the expense of the 99% who end up losing their jobs and savings in the resulting bust that always happens.
Why? Because conservative economic policy is intentionally designed to produce that very result.
Conservative republicans never learn from the mistakes of the past and without fail always repeat the same mistakes over and over again while relying on the ignorance of the voters {who have no excuse for not knowing better} who support them.
zebra
May 5th, 2012
10:31 am
“From each according to his abilities to each according to his needs has failed conclusively.”
Strawman Alert! Strawman Alert!
Until the President proposes nationalizing the profiteering oil companies or the blood-sucking banks, you are living in a made-up world. Saying stupid things over and over does not make them so.
However the Buffet rule just asks the people who can afford to pay to pay an equal measure as their secretaries.
carlosgvv
May 5th, 2012
10:31 am
So Paul Krugman, Nobel Prize Winner, is deliberately distorting the facts?
md
May 5th, 2012
10:32 am
“Clearly the way to fix our Cocaine George broken economy is to cut spending , thereby reducing the amount of money in the economy, and reducing gov’t employment thereby reducing demand further.”
“reducing the amount of money in the economy”…….just wow.
You do know that the private sector has to generate the money for the public sector to spend….don’t you?? Just a note, but the private sector must spend that same capital much more efficiently or they go out of business……I’d roll the dice with growth from that vs growth from waste.
md
May 5th, 2012
10:33 am
“It is worthy to note that Krugman was awarded a Nobel Prize in Economics.”
I wouldn’t hang my hat on that one considering the Nobel isn’t what it used to be….they lowered their standards when they gave one to Obama for achieving absolutely nothing……
Michael H. Smith
May 5th, 2012
10:35 am
Use your brain man. Both parties are bought and paid for by corporate america. Oblamer appoints Immelt as jobs cszar? Really? The only way to protect the average Joe is to cut off lobbyists from access to politicians and impose term limits. Until then, all of us can p!$$ and moan about the other party while we watch both get more brazen with their shady dealings, and get propped up by the media as being the next great thing.
I agree both these major political parties have taken us down this road to destruction. But don’t look for any objectivity to come from this bunch of subjective minds, particularly from those on the left.
The Fresh Prince of Bill Ayers
May 5th, 2012
10:35 am
that Republicans had deliberately run up the deficit during the 2000s in order to have a “reason” to cut into entitlements, which has been their passionate agenda since the FDR era. The 2000s were the “now or never” time for conservatives to fulfill that long-held entitlement cutting mission. (See Krugman’s “The Bankruptcy Boys,” New York Times, 2/22/2010.)
I believe Krugman is correct in his assessment of the direction our nation should take, now, regarding tax cuts and spending. It is worthy to note that Krugman was awarded a Nobel Prize in Economics
A: the value of the Nobel Peace Price took a dump when Obama got it based on his skin color.
B: cutting entitlements is political suicide, the republicans did not deliberately attempt it.
C: How well is the European model you crave for working for you? I get it, we can print more money with no consequences right??
zebra
May 5th, 2012
10:36 am
You do know that the private sector has to generate the money for the public sector to spend….don’t you??
I love it. Did Rush not tell you there is a huge pile of money already generated? Ever hear of Swiss bank accounts? Caymans? Trust babies not paying taxes? Rush is not helping you here.
AmVet
May 5th, 2012
10:36 am
So what exactly is it about the word democracy that frightens you Republicans so much?
Does that explain your self-imposed state of utter unempowerment?
At least the somewhat kooky Tea Partiers have the courage and understanding that the power of collective, grass roots organizations is very American. And the Civil Disobedience that our Founding Fathers and men like Frederick Douglass wrote of so eloquently, is the height of American patriotism.
But you neocons?
You sit by and grin as your leaders sell off your sovereignty to the highest bidder. Whether on Wall Street or in Beijing. It doesn’t matter to them. Or you.
And worse, you self-sidelined Republicans go crazy, making up the most outrageous, wholesale, malicious lies about your fellow Americans, based on a miniscule percentage of miscreants.
Just because they have the temerity to stand up and loudly, ENOUGH!
While you do damn near nothing and seem complacently happy about the failed status quo.
Wake up, it takes a whole lot more than just stereotyping and hating liberals to call yourselves conservatives…
zebra
May 5th, 2012
10:39 am
@ the fresh prince…um there is a difference in the Nobel Peace Prize and the other Nobel prizes. You keep bringing the Peace Prize when the subject is Krugman.
Doesn’t Rush teach y’all anything?
The Fresh Prince of Bill Ayers
May 5th, 2012
10:41 am
Wake up, it takes a whole lot more than just stereotyping and hating liberals to call yourselves conservatives…
Better take the guns away then…..
AmVet
May 5th, 2012
10:43 am
Sorry, Reagan! My bad!
I didn’t realize it was the hater who went all fascist on me. But the boys at Stormfront would welcome him with open arms, huh?!
Mike, you petulant poster,
You did not do the very simple task that was asked of you – post one verifiable piece of evidence that proves a representative democracy like the United States of America is mutually exclusive from a constitutional republic like the United States of America.
Just one.
But nothing? Nary? Nada? Zilch? Zero?
Why not???
Should be cake for a well researched and highly informed person such as yourself.
Keep digging, you’ll get yourself out of that hole!
md
May 5th, 2012
10:43 am
“I love it. Did Rush not tell you there is a huge pile of money already generated? Ever hear of Swiss bank accounts? Caymans? Trust babies not paying taxes? Rush is not helping you here.”
Of course, and it all belongs to those that feel entitled to it……I get it. It always has been and always will be easier to vote for the neighbor to go to work…..I get that too.
md
May 5th, 2012
10:45 am
“You sit by and grin as your leaders sell off your sovereignty to the highest bidder. Whether on Wall Street or in Beijing. It doesn’t matter to them. Or you.”
Says the guy that had no problem bidding on an Infinity……made in Japan.
The lack of understanding complicity is astounding Am…….
zebra
May 5th, 2012
10:47 am
“Of course, and it all belongs to those that feel entitled to it……I get it. It always has been and always will be easier to vote for the neighbor to go to work…..I get that too.”
So, waitaminit, is there no money or is greed good? You are arguing out of both sides of your mouth here.
Damn it Rush, get em straight!
Michael H. Smith
May 5th, 2012
10:47 am
Hey face it Am, you are wrong and very stupidly wrong. Even the Supreme Court reaffirmed and made it very clear in the case of Gore – V – Bush that we are a Representative Republic not a – one man one vote majority ruled – democracy.
The Fresh Prince of Bill Ayers
May 5th, 2012
10:48 am
zebra
May 5th, 2012
10:39 am
@ the fresh prince…um there is a difference in the Nobel Peace Prize and the other Nobel prizes. You keep bringing the Peace Prize when the subject is Krugman.
Doesn’t Rush teach y’all anything?
I don’t listen to Rush Windbag, quite frankly I can’t stand the pompous Republican mouthpiece. Second, I think many “acedemia puppets” are nothing more than opinionists. Not problem solvers. Unfortunately now, we need problem solvers, not looking into the past and viewing other peoples opinions and ideas based on their education level as a tangible way to solve problems. But if you want to turn the US into Spain or Greece based on Krugmans ideas more power to ya!
Liberal Pariah
May 5th, 2012
10:48 am
Krugman has a Nobel Prize but his opinion is better than anyone elses. Liberals crack me up. Obama has a Nobel Prize and it’s not doing the country much good either. Krugman still has a Liberal Worldview by which he filters everything and Kyle’s original point that the European mess could just as easily be from raising taxes as cuts still hasn’t been refuted to this point.
zebra
May 5th, 2012
10:50 am
I must live in the wrong neighborhood. None of my neighbors were making billions under Cocaine George in writing unregulated derivatives which we later had to bail out. (howdy, neighbor)
Rafe Hollister
May 5th, 2012
10:50 am
MHS and Amvet
Democracy frightens me because if you whip up enough “feelings” and “outrage” you can lynch someone or a whole country. Dems are controlled by their feelings so they willfully ignore the constitutionally mandated republic of states. Oblama has said that the Constitution is limiting in that it says what gov can not do, but does not require government to do much other than provide for the common defense and to establish laws.
He would like to be President of a democracy, because he is such a great orator, who could whip up his mindless minions to seek social justice, as he defines it. Only the Constitution and the laws of the land hold him in check. His sychophant minions would like to give him the opportunity to be, what they hope he would be, a benevolent dictator.
The Fresh Prince of Bill Ayers
May 5th, 2012
10:53 am
zebra
May 5th, 2012
10:50 am
I must live in the wrong neighborhood. None of my neighbors were making billions under Cocaine George in writing unregulated derivatives which we later had to bail out. (howdy, neighbor)
It’s a darn shame that you’ll be stuck with those neighbors as your house values continue to plummet under the O’blamer economy!
Rafe Hollister
May 5th, 2012
10:54 am
Liberal Pariah
You don’t think that killing terrorists with bombs launched from drones is more peaceful than capturing and water boarding terrorists. That is why he was given the “Peace Price” right?
Rafe Hollister
May 5th, 2012
10:55 am
George Zimmerman would be deceased if we lived in a democracy.
zebra
May 5th, 2012
10:57 am
“It’s a darn shame that you’ll be stuck with those neighbors as your house values continue to plummet under the O’blamer economy!”
You are wrong by definition, but that was funny.
AmVet
May 5th, 2012
10:57 am
you are wrong
Then prove it.
This is your third opportunity to do so.
Has the cat suddenly got your neocon tongue?
You’ve got nothing.
Even a precocious fifth grader knows that the USA is BOTH a representative democracy AND a constitutional republic.
But for myself and numerous others here, thanks for the laughter!
Michael H. Smith
May 5th, 2012
10:57 am
Rafe
You and I know exactly why and to what great extent we should all be glad that we are a Republic and not a democracy. This is why I jump all over this crap of, “we are a democracy” or this idiotic “interchangeability bunk of republic and democracy” when someone either knowingly or unknowingly says it.
Is slavery and the 14th Amendment interchangeable?
Yeah, now go for it!
AmVet
May 5th, 2012
10:59 am
Rafe, do you agree or disagree:
a) The terms representative democracy and constitutional republic are mutually exclusive
b) the United States is not a representative democracy
md
May 5th, 2012
11:02 am
“So, waitaminit, is there no money or is greed good?”
Greed is relative……it occurs on every point of the spectrum…..wanting what one did not earn is also a form of greed.
Michael H. Smith
May 5th, 2012
11:02 am
I already have too many times to mention again and again to someone as dumb as a box of rocks, Am.
Show me where in the Constitution the word or idea of democracy is guaranteed?
I can show you exactly where a Republican form of government is mandated to every state in this union!
Article IV, Section 4 of the U.S. Constitution
“The United States shall guarantee to every State in this Union a Republican Form of Government, and shall protect each of them against invasion; and on Application of the Legislature, or of the Executive (when the Legislature cannot be convened) against domestic Violence.”
AmVet
May 5th, 2012
11:09 am
Dance away ballerina.
Or just answer provide one piece of evidence.
One.
Danger, Will Robinson! More embarrassment coming your way!
Representative democracy is a system of government in which those who possess authority to govern the political society–those who have the right to make decisions that have the force of law and are therefore binding on all members of the society–acquire and retain this authority either directly or indirectly as the consequence of winning free and competitive elections in which the great majority of adult citizens are allowed to vote. Representative democracy, in other words, is government carried on by elected representatives. Authoritative decision making and action on public policy is carried on by government officeholders elected directly or indirectly by the voters and by those appointed or succeeding to their offices in accordance with the laws of the political community.
In a representative democracy, major officeholders in the government must face periodic election and are thereby made accountable (responsible, or answerable) to the voters for their official decisions and actions while in office. Elections are held at regular and comparatively short intevals. Thus, incumbent holders of elective office must regularly and frequently run for and win reelection in order to retain their positions of political authority. Free, competitive elections and public accountability put the voters in a position to cast judgement on the authoritative decisions and actions of public officeholders. If dissatisfied with the official decisions and actions, the voters can deny reelection to the official decision makers, voting them out of government office. If, on the other hand, the voters are satisfied with the authoritative decisions, they can reelect the authoritative decision makers.
Examples of representative democracy include all contemporary constitutional democracies, at the national level. In the U.S.A., the fifty states and most local governments, as well as the national government, are representative democracies.
http://www.proconservative.net/CUNAPolSci201PartTwoD.shtml
The Fresh Prince of Bill Ayers
May 5th, 2012
11:10 am
Show me where in the Constitution the word or idea of democracy is guaranteed?
I can’t recall ever hearing a media bimbette ever reference our country as anything but a democracy. Unfortunately, that’s where most people their opinions and thoughts from.
yuzeyurbrane
May 5th, 2012
11:10 am
Dusty and other slow-learners, I will try to use small words so you will understand. I did not do economic analysis–Kyle and Krugman did. Both cited facts. I choose to give more credibility to Krugman’s analysis. That does not make me superior to you or other bloggers. However, I think my opinion is more solidly based on credible analysis by an expert in economics. As to the others on the right, did not mean to get your bowels in such an uproar that you had to pull out Newt’s old playbook of name-calling and mislabeling.
AmVet
May 5th, 2012
11:12 am
Forget passing ninth grade civics class, Mike.
I stand by my earlier assertion.
You are a joke.
Michael H. Smith
May 5th, 2012
11:12 am
The only one dancing is you Am brucie.
Rest of us are glad for what little we have left of this Republic and we are going to get some of it back this election.
Love me some Reagan
May 5th, 2012
11:14 am
Vet
You notice how Tiberius and Prince avoided the West issue like the plague when confronted with facts
It was as usual kyrptonite to them