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New Research Undermines The GOP’s Austerity Offensive Against U.S. Economy
http://thinkprogress.org/economy/2013/04/16/1875631/new-research-blows-a-hole-in-gops-austerity-agenda/In the debate over government spending, the central data point wielded by fans of austerity is the claim that once a country reaches a debt load over 90 percent of its economy a threshold the United States is approaching economic growth goes into a tailspin. That argument came from a 2010 study by Carmen Reinhart and Kenneth Rogoff. After surveying a wide number of countries, they found that, on average, once the 90 percent mark is crossed, economic growth slows. Though the paper always had problems that kept many economists from embracing it, that didnt stop it from becoming the most influential article cited in public and policy debates about the importance of debt stabilization as Slates Matt Yglesias put it.
There were already problems with the Reinhart-Rogoff study, but up until now, other researchers havent been able to replicate or pick through its numbers. A new paper finally has, and as Mike Konczal over at Next New Deal reports, it dug up some truly mortal flaws.
First, Reinhart and Rogoff excluded the post-war years for certain countries that enjoyed robust economic growth despite debt levels well over 90 percent. They also chose a skewed method of weighting the data: for example, New Zealands single year of terrible growth while over the 90 percent threshold wound up counting just as much as Britains 19 years of healthy growth. And they even incorrectly input at least one Excel spreadsheet formula, wrongly excluding several countries form their calculations.
In short, the central argument in support of austerity cited by MSNBCs Joe Scarborough, the New York Times David Brooks, and multiple times by House Budget Committee Chairman Rep. Paul Ryan (R-WI) is now defunct. No one disputes that a country should avoid a big build-up in debt over the long-term. But every concrete signal were getting from the American economy our high unemployment, our low inflation, our extraordinarily low interest rates, and our negative real interest rates are a signal that more debt spending in the short term to fight the depression is perfectly appropriate. Thanks to the austerity drive that was heavily influenced by Reinhart and Rogoffs study, American lawmakers ignored those signals (and plenty of others) and cut spending, delivering the most destructive fiscal policy weve had in any recession since at least 1980.
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New Research Undermines The GOP’s Austerity Offensive Against U.S. Economy (Original Post)
Bill USA
Apr 2013
OP
I don't know why people would think that anything the GOP proposes would be good
Turbineguy
Apr 2013
#1
Turbineguy
(37,291 posts)1. I don't know why people would think that anything the GOP proposes would be good
for the US. They want to harm the US. If the Soviets had only had today's GOP in place in the 1950's. I'd be paying my internet bill in rubles.
santamargarita
(3,170 posts)2. They have the fascist media echo chamber and
hate radio propaganda
A Little Weird
(1,754 posts)3. That's very interesting!
However, I don't expect the republicans to let pesky facts inform their policies.