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
Michael H. Smith
May 5th, 2012
11:14 am
You fall by your stupidity Am brucie wilcox!
Love me some Reagan
May 5th, 2012
11:15 am
“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?”
You chimed in, did you not?
Pass my posts by if you like
Now with Ten Percent Fewer Calories
May 5th, 2012
11:17 am
Krugman points out that Spain had a low debt and a budget surplus and they had a housing bubble that burst and this burst bubble led to a state of fiscal austerity. Krugman then argues that the approach to salvation offered by Germany, which also happened to be the source of all the excessive money flow funding their now-burst housing bubble, is not a sound strategy. In other words, Spain should not be subjected to even more austerity measures as a solution to its ongoing fiscal austerity caused by the burst housing bubble. Instead, Krugman suggests that what is really needed is something along the lines of what the US did — more expansionary policies. Regarding Krugman’s reference to austerity measures, his main emphasis was on highlighting the negative impact more of such measures would have on a country that already suffers from high unemployment and a contracted economy. Kyle chose to cherry pick from Krugman’s article and run off on a tangent instead of focusing on the content of the article. Then he continues to cherry pick other pieces of data to build up his original hypothesis regarding “liberals pointing to shrinking” whatevers.
Mary Elizabeth
May 5th, 2012
11:19 am
For those who do not understand, or do not care to understand, why the Nobel Committee awarded President Obama the Nobel Peace Prize. Here are the reasons, as stated by the Nobel Committee, itself. It is unfortunate that many still wish to denigrate this president.
(BTW, credit for first posting this statement by the Nobel Committee goes to AmVet. Thanks again, AmVet.)
——————————————————————————
“The Nobel Peace Prize for 2009
The Norwegian Nobel Committee has decided that the Nobel Peace Prize for 2009 is to be awarded to President Barack Obama for his extraordinary efforts to strengthen international diplomacy and cooperation between peoples. The Committee has attached special importance to Obama’s vision of and work for a world without nuclear weapons.
Obama has as President created a new climate in international politics. Multilateral diplomacy has regained a central position, with emphasis on the role that the United Nations and other international institutions can play. Dialogue and negotiations are preferred as instruments for resolving even the most difficult international conflicts. The vision of a world free from nuclear arms has powerfully stimulated disarmament and arms control negotiations. Thanks to Obama’s initiative, the USA is now playing a more constructive role in meeting the great climatic challenges the world is confronting. Democracy and human rights are to be strengthened.
Only very rarely has a person to the same extent as Obama captured the world’s attention and given its people hope for a better future. His diplomacy is founded in the concept that those who are to lead the world must do so on the basis of values and attitudes that are shared by the majority of the world’s population.
For 108 years, the Norwegian Nobel Committee has sought to stimulate precisely that international policy and those attitudes for which Obama is now the world’s leading spokesman. The Committee endorses Obama’s appeal that “Now is the time for all of us to take our share of responsibility for a global response to global challenges.
Oslo, October 9, 2009″
http://www.nobelprize.org/nobel_prizes/peace/laureates/2009/press.html
——————————————————————————–
AmVet
May 5th, 2012
11:20 am
Reagan,
These forever stuck in 1952 stupid, fake conservative illiterates LOVE the ungentlemanly and Article 15′ed Witch Hunter.
Or is that mutually exclusive? Huge LOL.
Either way, the Limbaugh-like, loud mouthed lout is a one and done in Florida…
MarkV
May 5th, 2012
11:22 am
md@10:24 am
The numbers given by Kyle is exactly what I was referring to. As for an increase in spending, which was about 4% in 2010 and 1.7% in 2011, what do you expect the budgets of countries to do, decrease with time?
GT
May 5th, 2012
11:22 am
Is the economy of America the people or is it smoke and mirrors of Wall Street? What the international competition is doing and going to do is put that to the test. What separates America from Iceland, or Spain or China? If America is totally striped of all its wealth and has to rebuild on a level playing field with the rest of the world what asset do we have to get it done?
The Fresh Prince of Bill Ayers
May 5th, 2012
11:23 am
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
I fail to understand your obsession with West. Perhaps you have a man crush on him. I don’t, and I’m not interested in looking into his past. As far as my opinion goes about him, he is an opinionated big mouth. Don’t care to research any further, but proceed with your stalking….
Love me some Reagan
May 5th, 2012
11:24 am
Vet
West’s own Party thanked him by practically redistricting out of the race………..
Love me some Reagan
May 5th, 2012
11:26 am
Prince
Quit crying like a little child
Tiberius told Vet to put up evidence about west or “STFU”
I put up the evidence that he wanted…… Of course he ran and you chimed in
If you do not like my posts……. keep it moving
huffing and puffing will only make you blue or read in the face…….. nothing else will come of it
Love me some Reagan
May 5th, 2012
11:32 am
Happy Cinco de Mayo
If you are drinking and out somewhere……… Please do not drive
The Fresh Prince of Bill Ayers
May 5th, 2012
11:32 am
huffing and puffing will only make you blue or read in the face…….. nothing else will come of it
Sensitive this morning are we? You might be fixing to start…
AU Liberal in ATL
May 5th, 2012
11:40 am
I’m sure you’re the local expert on Europe, Wingnut. You’ve probably never been farther from Atlanta than Panama City Beach, FL.
AmVet
May 5th, 2012
11:50 am
Mary Elizabeth, you are most welcome!
If you are drinking and out somewhere……… Please do not drive
Sage advice.
I’ll be going back to my Kansas cowboy roots (and cowboy boots!) and doing some volunteer work today – helping low-income kids have fun around horses.
So no drinking for me. At least until I get home this evening!
http://www.cdakids.org/
md
May 5th, 2012
11:50 am
Mary…..as we said, he did nothing……as for promoting peace, a bit ironic that he continues to send drones into a sovereign Pakistan and have hit orders out on American citizens, and a few more un-peaceful actions.
He did nothing extraordinary, which is what the Nobel used to be about. Want a real Nobel winner, go to Libya or Syria and watch what people are doing to achieve a better life……vs doing nothing when the people of Iran asked for help.
You libs
May 5th, 2012
11:56 am
Okaaay…can’t use the word n**ro here. Makes sense, it’s such a bad word. Incendiary even.
Let me try again:
We had eight years of tax cuts during the Bush administration. As any reasonable person knows, the best economy in the history of the United States resulted. Then that (filtered word) guy took office, raised everybody’s taxes sky-high, and now look at the mess we’re in.
That’s how I remember it.
Mary Elizabeth
May 5th, 2012
12:02 pm
“Mary…..as we said, he did nothing……as for promoting peace, a bit ironic that he continues to send drones into a sovereign Pakistan and have hit orders out on American citizens, and a few more un-peaceful actions.”
================================================
Take the time to read President Obama’s Nobel Peace Prize Speech, in full, and you will understand why it is not “ironic.”
http://www.msnbc.msn.com/id/34360743/ns/politics-white_house/t/full-text-obamas-nobel-peace-prize-speech/
Michael H. Smith
May 5th, 2012
12:14 pm
What do you mean obumer did nothing extraordinary, md?
Can you name one other President in the history of this country who has more than 5 trillion dollars of spending to his credit?
Even Bush couldn’t beat that extraordinary feat!
Lil' Barry Bailout (Revised Downward)
May 5th, 2012
12:17 pm
zebra: Clearly the way to fix our Cocaine George broken economy is to cut spending , thereby reducing the amount of money in the economy
——————–
Where does the money Obozo is blowing come from? Either the real economy or China. Leave the money with the Americans who earned it–they know how to spend it more effectively than your Idiot Klown.
And take a macroeconomics class, lest you embarrass yourself further.
AmVet
May 5th, 2012
12:19 pm
Then that (filtered word) guy took office
The cleaners called. Your sheets are ready…
Lil' Barry Bailout (Revised Downward)
May 5th, 2012
12:20 pm
You libs: We had eight years of tax cuts during the Bush administration. As any reasonable person knows, 4-6% unemployment, increasing tax revenues, a 14,000 Dow, and measly $300 billion deficits resulted.
————————
Fixed.
@@
May 5th, 2012
12:23 pm
The EU’s “civil” war?
The PIGGS position would be: “We are trying as hard as humanly possible to eliminate our deficit, but we have a debt-rollover problem.”
Because….?
The German government could, of course, take care of the problem if it were willing to guarantee all Italian, Spanish and other debt. But it is understandably reluctant to take such an enormous risk — even though it is, of course, taking a big risk by not guaranteeing southern European governments’ debt.
The ECB could solve the problem by acting as buyer of last resort for all of the debt shunned by financial markets. But it, too, is understandably reluctant to assume the risk — and it is this standoff that has unnerved markets and endangered the euro’s viability.
Managing a debt overhang has always been one of the toughest challenges for policy makers. In antiquity, the conflicts between creditors and debtors often turned violent, as the alternative to debt relief was slavery. In today’s Europe, the conflict between creditors and debtors takes a more civilised form, seen only in European Council resolutions and internal ECB discussions.
But it remains an unresolved conflict. If the euro fails as a result, it will not be because no solution was possible, but because policy makers would not do what was necessary.–Business Standard
Looks like Krugman is more willing than others to succumb to slavery.
Civility aside, pith off, Polly. No can do!
@@
May 5th, 2012
12:26 pm
Apologies for the lengthy excerpt.
Probably my only post for the day. I have some beans sprouting, some not.
Never drink and garden. It limits your crop yield. Today’s planting will be my bumper.
getalife
May 5th, 2012
12:35 pm
The gop wanted austerity here but our President said no.
He listened to President Clinton or we would be Europe.
“Obama: ‘Time to focus on nation-building’
The president says money saved from ending wars in Iraq and Afghanistan should help the economy.”
Music to my ears.
Sounds like peace and prosperity to me.
getalife
May 5th, 2012
12:38 pm
Germany is rising again so keep an eye on them.
rw extremists are winning there.
The last time that happened we got the nazis.
getalife
May 5th, 2012
12:43 pm
“GOP, take down that small tent:
By Arnold Schwarzenegger
Opinion: California’s Republican Party used to work toward solutions. Now it’s an exclusive club where members’ ideological cards must be checked at the door.”
The tiny tent will fail.
JohnnyReb
May 5th, 2012
12:45 pm
“………………the New York Times’ Paul Krugman…”
Now, there’s a weasel for you. Makes you want to take your thumb and rub him out.
I can hardly wait for tomorrow’s AJC hardcopy to read the latest vile from another of the Times finest, Maureen Dowd.
Dowd and Krugman should be put on the next one way rocket to wherever. The world would be better for it.
I feel so much better!!
getalife
May 5th, 2012
12:46 pm
Krugman is just telling the truth.
No wonder you hate him.
JohnnyReb
May 5th, 2012
12:48 pm
Krugman would not recognize the truth if it bit him on the ass. Today’s AJC hardcopy has his article spouting the same spend more nonesense. He’s at most a pest.
getalife
May 5th, 2012
12:51 pm
reb,
He predicted the collapse.
corporate media calls the truth about your beloved 1 % populism but it is just the truth.
corporate media gives the gop a free pass.
You better pay them more so they will not stop.
You libs
May 5th, 2012
1:01 pm
Am Vet
Your electronics serviceman called and said you should check the batteries in your sarcasm detector.
JohnnyReb
May 5th, 2012
1:01 pm
getalife,
Kyle is a journalist, not an economist. To my knowledge, all Krugman does is economics. Kyle lays out the case in a few paragraphs showing the basis for Krugman’s continuous rantings to be false.
If you want to continue believing Krugman, be my guest. He has no credibility with me and probably most of the Right.
zebra
May 5th, 2012
1:04 pm
Lil’ Barry Bailout (Revised Downward)
Did you not get your Rush talking points on the 70 trillion dollars in unregulated derivatives Cocaine George allowed? Macro that.
getalife
May 5th, 2012
1:06 pm
When England decided to use austerrity I thought it was a good comparison to our President’s plan to determine which plan would work.
Austerity failed so it was the wrong plan.
Admit it kyle.
getalife
May 5th, 2012
1:07 pm
BTW, we tried austerity in the first depression.
It failed too.
Admit it kyle.
getalife
May 5th, 2012
1:08 pm
reb,
No, Krugman is just like kyle except Krugman has credibility,
Mary Elizabeth
May 5th, 2012
1:09 pm
Wonderful link you provided, AmVet. I am glad to learn of it. Maybe more will be inspired, like you, to help a preschool, disadvantaged child, by being a mentor. Being an early mentor could well make a difference in whether a child graduates from high school or not, down the road.
I’ll post your link once again, just in case others are also inspired to help. Well done!
http://www.cdakids.org/
You libs
May 5th, 2012
1:11 pm
“If you want to continue believing Krugman, be my guest. He has no credibility with me and probably most of the Right.”
__________
I heard that with both eyes. He’s no better than those idiots over at the National Academy of Sciences with all their scientific hocus-pocus.
Michael H. Smith
May 5th, 2012
1:12 pm
Hey, Comrade lil barry is giving his stump speech… quickly, “lean forward” libs and turn on
MSNBCMSDNC for your latest “Social Democracy” talking points from “dear leader” obumer mm, mm, mm…getalife
May 5th, 2012
1:13 pm
Also, I watched both corrupt parties deregulate the regulations on the banks imposed after the depression.
I thought what in the world are they thinking..
Then durbin told us that the banks own the place.
The rest is history.
getalife
May 5th, 2012
1:17 pm
So, we have two main issues that are mistakes that we need to admit so it will not happen again.
Deregulating the banks for donations was wrong.
Using austerity after a collapse is wrong.
Lets admit these facts and never repeat these mistakes.
getalife
May 5th, 2012
1:23 pm
And we are still bailing out the gse called Fannie and Freddie that needs to be addressed.
AmVet
May 5th, 2012
1:32 pm
Your electronics serviceman called and said you should check the batteries in your sarcasm detector.
Yikes!
Twice in one day!
In my best Roseann Roseannadanna voice, “Never mind.”
Thanks Mary E!
I believe that volunteering – something I have done since I was a 19 year old kid, stationed at MacDill AFB, helping out at the Tampa Lighthouse for the Blind – is a sacred duty. Especially when kids are the beneficiaries! And why I spent years as a leader in the Cub and Boy Scouts.
It allows me, in a small way, to give back to this country, which has given me everything I have! And frankly, the reward is having fun doing it!
And thanks for reposting that link!
Love me some Reagan
May 5th, 2012
1:38 pm
“Hey, Comrade lil barry is giving his stump speech… quickly, “lean forward” libs and turn on MSNBC MSDNC for your latest “Social Democracy” talking points from “dear leader” obumer mm, mm, mm…”
Nothing less than a sign of desperation……..
Did anyone see Karl Rove’s electoral college map?
He either is working to set up a scenario where Romney is the comeback kid or he knows that Romney is in deep do do……
Wonder which in it is?
getalife
May 5th, 2012
1:47 pm
AmVet,
My Grandfather was a Boy Scout leader in Texas and at his funeral many Scouts came to speak on how he changed their lives.
He was a preacher too but never preached hate like today’s preachers.
I knew he was a great leader but after his funeral I was in awe of all the people’s lives he helped.
Karen
May 5th, 2012
1:52 pm
Lil Barry Bailout, seems like a good name for you.
Jack
May 5th, 2012
1:56 pm
I notice when liberals don’t agree with a post, they either call the poster an idiot, a fool or worse. Name calling of that sort is a sure sign of immaturity.
getalife
May 5th, 2012
1:58 pm
What about con insults jack?
Free pass for them?
Rafe Hollister
May 5th, 2012
2:27 pm
Amvet
Just to give you a short answer to your question. I have never heard the term “representative democracy” until you brought it up. In civics we were taught the USA was a representative republic, a republic that was ruled by laws, not men. Democracy has been blurred over the years to mean any government where they hold free, open, and honest elections. Few of these countries met the true definition of “democracy”, they all have some form of government based on legal traditions and elected representatives.
To me a group of vigilantes or citizens security force would be a democracy. If you don’t like what they are doing or the leadership is doing, vote them out and do what the majority want. A true democracy would be too volatile and unstable to function well, as whomever has the loudest voice and passion would wind up being the leader until they offended enough of the people, that they were overthrown.
I agree with MHS, there is no mention of democracy in the Constitution but multiple mentions of republic. The founding fathers were opposed to democracy as it is too volatile.
Rafe Hollister
May 5th, 2012
2:31 pm
getalife
You grandfather sounds like a great person and great American. Obviously he found great value in the BSA.
Did you know your hero and messiah, Barry Oblamer, is the first President to turn down the honor of being the honorary head of BSA. He doesn’t like their membership policies.