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
md
May 5th, 2012
8:13 pm
“Still not getting any feedback on Cocaine George and the unregulated 70 billion in derivatives, the worthless paper that continues to haunt us to this day.”
here’s some feedback…….thousands of homeowners couldn’t afford their homes (and they knew it) and not one single one of them were forced to buy what they couldn’t afford……laying it all at the foot of Wall St is the ultimate one finger out three fingers back argument.
One is fooling themselves if they think only one party was guilty in that fiasco…….
Love me some Reagan
May 5th, 2012
8:18 pm
“One is fooling themselves if they think only one party was guilty in that fiasco…….”
True but if derivatives had not run so wild in terms of the housing and construction bubble, the bail outs would not have been so large
But to your point one should be responsible for what they purchase and the banks and investments firms who bent us all over with the derivative game should have been hit in the head; not rewarded as they were by Bush and Obama
md
May 5th, 2012
8:22 pm
“True but if derivatives had not run so wild in terms of the housing and construction bubble, the bail outs would not have been so large”
And as I said, that was a 2 party game…..and nobody was forced to play. But I agree on the lack of justice in the bailout……but then again, we got screwed there coming and going.
But to blame it on the derivatives is pointing fingers. IF folks could afford what they bought, there would be no need for a bailout………….
@@
May 5th, 2012
9:38 pm
zebra @ 5:04 The Pentagon is the right’s welfare program for billionaires.
Funny you should mention that….just the other day I was reading an article (archived) at the NYTimes that lauded, then, Secretary of Defense Cheney’s cuts to the Pentagon’s budget.
Over Cheney’s four years as secretary of defense, encompassing budgets for fiscal years 1990-93, DoD’s total obligational authority in current dollars declined from $291.3 billion to $269.9 billion. Except for FY 1991, when the TOA budget increased by 1.7 percent, the Cheney budgets showed negative real growth: -2.9 percent in 1990, -9.8 percent in 1992, and -8.1 percent in 1993.
Cheney was quoted as having said: “The spending proposed by the Pentagon has little to do with national defense and more to do with congressmen/women and the districts they serve” or something to that effect.
Dick Cheney? Whodathunkit!!!
schnirt
Ol' Timer
May 5th, 2012
9:44 pm
A Romney win with a GOTP House equals a double-dip recession.
Tax revenues, as a percentage of GDP, are at a 60 year low and all the GOTP can focus on is cutting spending, lowering taxes on businesses and the super wealthy and removing regulations — including the EPA and Wall Street.
As someone said, it’s better to know nothing than a lot that ain’t true.
@@
May 5th, 2012
9:47 pm
Obama declares Romney out of touch and Romney???
Obama’s trip to Ohio State came just a day after Romney penned an open letter to the president in the Cleveland Plain-Dealer Friday, accusing him of being “out of your depth” on the economy and telling him, “what you are offering Ohio now is too little, too late.”
“Out of your depth” on the economy.
Thassa good’n!
getalife
May 5th, 2012
9:52 pm
@@.
It means willard has no idea what he is talking about.
His job creation numbers are horrible.
getalife
May 5th, 2012
10:09 pm
“COLUMBUS, Ohio — Plunging into his campaign for a new term, President Barack Obama tore into Mitt Romney on Saturday as a willing and eager “rubber stamp” for conservative Republicans in Congress and an agenda to cut taxes for the rich, reduce spending on education and Medicare and enhance power that big banks and insurers hold over consumers.
Romney and his “friends in Congress think the same bad ideas will lead to a different result or they’re just hoping you won’t remember what happened the last time you tried it their way,” the president told an audience estimated at over 10,000 partisans at what aides insisted was his first full-fledged political rally of the election year.” Aol.
All willard does is lie.
@@
May 5th, 2012
10:12 pm
Getalife:
I was worried that Romney wouldn’t know how to play hard ball.
Perhaps I was wrong.
In spite of the “cool” persona, Obama is easily rattled.
It’s gonna be fun to watch.
getalife
May 5th, 2012
10:15 pm
@@,
Our President is a smooth operator
willard is wishy washy and fake.
Easy victory for our President if the people vote..
@@
May 5th, 2012
10:26 pm
Getalife:
Gary Johnson has won the Libertarian Party’s nomination. He’ll be on the ballot in November…all 50 states.
He is best known for his support for the legalization of marijuana and the end of the so-called war on drugs. He supports same-sex marriage, and an immediate end to the war in Afghanistan.
He’s a democrat’s dream come true.
RW-(the original)
May 5th, 2012
10:38 pm
He’s a democrat’s dream come true.
And interestingly before he found his true home as a Libertarian he was more comfortable identifying himself as a Republican than a Democrat(ic)
Must be true that we Republicans are truly the ones with the big tent.
Lil' Barry Bailout (Revised Downward)
May 5th, 2012
10:42 pm
All willard does is lie.
——
Uh, Einstein, your quote was from Obozo, not Romney.
Oopsies!
getalife
May 5th, 2012
10:43 pm
Those are lib positions.
I Report (-: You Whine )-: mmm, mmmm, mmmmm! Just sayin...
May 5th, 2012
11:06 pm
Just in case you’re having difficulty keeping up with all these Composite Americans, George Zimmerman, the son of a Peruvian mestiza, is the embodiment of endemic white racism and the reincarnation of Bull Connor, but Elizabeth Warren, the great-great-great-granddaughter of someone who might possibly have been listed as Cherokee on an application for a marriage license, is a heartwarming testimony to how minorities are shattering the glass ceiling in Harvard Yard. George Zimmerman, redneck; Elizabeth Warren, redskin. Under the Third Reich’s Nuremberg Laws, Ms. Warren would have been classified as Aryan and Mr. Zimmerman as non-Aryan. Now it’s the other way round. Progress! – Steyn
Yep, liberals create the world they live in.
Planet Moonbat, just sayin…
@@
May 5th, 2012
11:19 pm
Getalife:
Those are lib positions.
I know…that’s why disappointed dems should vote for him.
A nice guy…just a bit flaky.
@@
May 5th, 2012
11:24 pm
RW:
The dems wouldn’t go for Johnson’s flat tax. Can’t have everyone paying their fair share, just some paying more than…
@@
May 5th, 2012
11:27 pm
WASHINGTON (AP) — Federal officials say the National Christmas Tree planted near the White House a year ago has died and is being removed.
Obama’s green thumb?
getalife
May 5th, 2012
11:35 pm
Are y’all watching SNL.?
@@
May 5th, 2012
11:40 pm
Johnson’s choice for VP is Judge Jim Gray of Orange County California.
He’s a big advocate for legalizing marijuana. He’s also written a musical “Americans All Musical”.
Synopsis:.
It’s a play, it’s a musical, it’s an inspirational show set in the high school classroom that shares the importance of staying in school through music, dialogue, and poetry.
Lil' Barry Bailout (Revised Downward)
May 6th, 2012
6:00 am
In spite of the “cool” persona, Obama is easily rattled.
——————–
Joe the Plumber made him pee his pants.
Roy
May 6th, 2012
8:24 am
Krugman vs. Wingfield? No contest there. I’ll take Krugman every time. Wingfield writes like a precocious 12 year old.
Lil' Barry Bailout (Revised Downward)
May 6th, 2012
8:55 am
Roy puts party before country, too.
Now with Ten Percent Fewer Calories
May 6th, 2012
9:12 am
Would Kyle return to Europe if another job like his last one over there were to open up? Why did he leave Europe to begin with? Was he unhappy with the taxation? the healthcare? the austerity? Inquiring minds.
Tiberius - Banned from Bookman's and proud of it!
May 6th, 2012
9:31 am
Love me some Reagan, you’re not new here, but you obviously don’t pay attention very much.
First, you missed my earlier point about being retired at 55. While that means that I can spend more time than most on this blog when I want to, it also means I can avoid this blog when I want to for extended periods of time as well, not just when the public libraries are open as in your case.
Two, I never avoid issues, especially those whose cause I take up.
Third, you may not have noticed, but I am unusually precise in my wording when I post. It allows me to be right more often as not (that, and my superior intellect), and it provides me with a vehicle by which I can catch liberals in their attempts to redefine or misrepresent what I have written, as was in your case. You claimed to dispute my notion that Col. West did not “retire of his own free will” – your words. Sorry, but my words were more precise, and more importantly, made no attempt to insert any knowledge of Col. West’s state of mind when he left the Army after 22 years.
To refresh your memory, I said that AmVet needed to provide proof that Col. West did not leave the Army “on his own terms”. Not only was my response to him designed to specifically debunk his incorrect belief that West was “disgraced” or “run out of the Army”, it forced you to redefine the argument incorrectly, using terms which would require you to know the state of mind of Col. West as he left the Army – something you could not possibly know.
Therefore, you (once again) provided no facts to back up your response, and indeed had to change the wording of my challenge in order to have it fit your preconceived notions.
In short, you failed miserably.
Next time, bring your big-boy pants to any discussion with me, Reagan.
AmVet
May 6th, 2012
9:53 am
Col. West did not leave the Army “on his own terms”
Yep, the screeching name-caller begged for his being immediately relieved of command – a sure career killer – and given the choice of either resigning his commission or facing court martial, which could have gotten him up to eight years in Leavenworth.
Better that he only got an Article 15 and letter of reprimand and just walked away.
To be clear, I do not make any judgement on what happened over there. And what the United States Army found.
Just that he has proven himself to be one of the worst of the worst as a subsequent civilian and member of the United States House of Representatives.
And I believe that the people of Florida will not send this one and doner back to Washington for a second term.
Time will tell.
Lil' Barry Bailout (Revised Downward)
May 6th, 2012
10:00 am
AmVet: I believe that the people of Florida will not send this one and doner back to Washington for a second term.
——–
Care to wager on that?
Tiberius - Banned from Bookman's and proud of it!
May 6th, 2012
10:09 am
“And I believe that the people of Florida will not send this one and doner back to Washington for a second term.”
Given your failure to accurately predict elections in the past few seasons, AmVet, I wouldn’t wager any money on that belief.
Lil' Barry Bailout (Revised Downward)
May 6th, 2012
10:21 am
No money…names.
Loser changes theirs to something completely different.
@@
May 6th, 2012
10:23 am
AmVet’s dream in life is to be the only name-caller left standing in the blog clog.
A weird obsession to be sure.
schnirt
Mary Elizabeth
May 6th, 2012
10:54 am
May 6th, 2012
10:52 am
I want to mention that at 11:00 am, in about 10 minutes, on Booknotes, on C-Span 2, the Harvard professor of economics and philosphy, Michael Sandel, author of “What Money Can’t Buy: The Moral LImits of Markets,” will be interviewed for an hour regarding the takeover of the market place in every phase of American life. His contention is that this is unhealthy because the market does not belong in every area of our lives – including in education. C-Span 2 is on channel 104 (Comcast) in my area of Atlanta.
Tiberius - Banned from Bookman's and proud of it!
May 6th, 2012
10:56 am
One more hour I don’t have to lose wasting time watching TV.
Zebra
May 6th, 2012
11:03 am
“One is fooling themselves if they think only one party was guilty in that fiasco”
I love it, love it love it. So the party that says Obama blames everyone else says the 70 trillion dollar derivative mess is not our fault! Never mind that it happened under Cocaine George and Bush-appointed SEC chairman Cox with Republican deregulation rules enabling the whole thing.
Ha to the right! At least you Rush folk are not restrained by any consistency or honesty.
Zebra
May 6th, 2012
11:05 am
“Over Cheney’s four years as secretary of defense, encompassing budgets for fiscal years 1990-93, DoD’s total obligational authority in current dollars declined from $291.3 billion to $269.9 billion. ”
Where are the numbers from his vice-presidency? I thought so
Just saying..
May 6th, 2012
11:06 am
“Must be true that we Republicans are truly the ones with the big tent.”
And when it’s least expected, an automatic laugh line turns up…
Just saying..
May 6th, 2012
11:11 am
@@
May 5th, 2012
11:27 pm: WASHINGTON (AP) — Federal officials say the National Christmas Tree planted near the White House a year ago has died and is being removed.
Obama’s green thumb?
des·per·ate: No brickbat too small.
Tiberius - Banned from Bookman's and proud of it!
May 6th, 2012
11:12 am
Zebra, your blatant partisanship is showing.
Assigning blame to any one person or party for the fiscal mess this economy was, and remains, in is sophomoric at best and simply plain stupid at worst.
To lay the blame for one specific (and over-inflated in dollars and importance, btw) market is silly. There are fundamental problems with dozens of facets affecting this economy, most due to over-regulation by government, while some are due to under-regulation. The mere fact that you think one President and party policy could affect such a complex economy in so short a time displays a severe lack of knowledge regarding economic forces.
Now with Ten Percent Fewer Calories
May 6th, 2012
11:12 am
On his first day in office, Gov. Nathan Deal signed a lobbyist gift ban for state employees, but 16 months later, dozens of officials have taken thousands of dollars worth of tickets, meals and travel from special interests.
What should Deal expect given that his party members in the Legislature as well as certain individuals that he appoints, etc., can take any amount of incentive from lobbyists without giving it a second thought. Deal should publish a list with names and amounts that each is allowed to take. It has to be very confusing given the different moral and ethical standards that Republicans apply to different people.
redneckbluedog
May 6th, 2012
11:12 am
I don’t know what it’s our business that austerity failed in France and Greece and now they’re Socialists..!!! I mean, I know Romney likes the French pretty good and all….but really….THIS IS AMERICA…!!!!
But I will say this….Paul Ryan and Mitt Romney and John Boehner and Eric Cantor had better hope their tax plan works…..because if it fails, America will be Socialist too….they’re won’t be no “tripling down” on Grover Norquist….I mean, the dude already looks like a Goober…..Nothing wrong with being an idealogue…unless you’re wrong…!!!!
redneckbluedog
May 6th, 2012
11:16 am
But then again…Romney may get in there and be more liberal than Roosevelt…never know about that guy…..
Love me some Reagan
May 6th, 2012
11:18 am
“Col. West did not leave the Army “on his own terms”.”
He did not leave on his own terms…….
The military did NOT allow him that choice. HeACCEPT a lessor charge that allowed him to retire in lieu of a trial
Going through a trial could have resulted in loss of benefits if found guilty…
It was NOT his terms…. The military did not say if you want to skip all the charges it is ok for you to leave………
But nice try
Your semantics did not work
Tiberius - Banned from Bookman's and proud of it!
May 6th, 2012
11:19 am
“des·per·ate: No brickbat too small.”
No sense of humor at all.
Tiberius - Banned from Bookman's and proud of it!
May 6th, 2012
11:21 am
“It was NOT his terms…. The military did not say if you want to skip all the charges it is ok for you to leave……”
And you know what he was thinking – how, Reagan?
Your try wasn’t even nice – it remains pathetic.
Zebra
May 6th, 2012
11:22 am
Tiberius, once again your Rush-fueled “everyone did it” argument may play with your ditto-headed born-againers but everyone else ( economists with no axe to grind) knows the supply side idiocy that is the modern day American right caused this economy. And 70 trillion is not overstated but minimizing the extent Cocaine George allowed Wall Street to spiral out of control is what the right must do.
I can’t believe you typed “overregulation” and “Cocaine George” in the same sentence without your computer blowing up.
Love me some Reagan
May 6th, 2012
11:24 am
55 yr old men say the following. Must be an adolescent 55. If you have kids or grand kids, bet they are proud
Tiberius – Banned from Bookman’s and proud of it!
May 5th, 2012
8:49 am
“like the disgraced, run out of the army, Alan West”
Please provide proof that Alan West did not leave the Army under his own terms, or just STFU, AmVet.”
“Tiberius – Banned from Bookman’s and proud of it!
May 3rd, 2012
2:11 pm
Oooh! Oooh! Kyle, call on me!!!! I can answer your 2:10! Please?”
So called 55 yr old bragging he was banned from a blog..
hahahahahahahahahaa
Love me some Reagan
May 6th, 2012
11:25 am
Has nothing to do what he was thingking
The military gave him a choice………..
Go through trial or accept a plea and retire
huff and puff all you like, that will not change the FACTS
Love me some Reagan
May 6th, 2012
11:26 am
West was not told, hey accept this plea and go back to work
Good job
Didn’t happen
Love me some Reagan
May 6th, 2012
11:28 am
you were wrong……. happens to all of us
yes even you
Tiberius - Banned from Bookman's and proud of it!
May 6th, 2012
11:30 am
Zebra, I can’t believe you think I typed “overregulation” and “Cocaine George” in the same sentence. Nor did I use any derivative of George Bush’s name at all.
Because I didn’t.
Zebra
May 6th, 2012
11:32 am
No you typed overregulation when speaking about Cocaine George though. Buy a sense of humor.