My colleague Michael Linden put out a new report this week where he makes the case that we need “reset” our national budget debate. That’s a good idea. I want to point readers to the conclusions Michael lists on the pain that austerity has caused in the US and abroad:
The key argument that high debt causes slower growth has crumbled.
Countries around the world have experimented with austerity, and those experiments have failed spectacularly
The U.S. economy has not healed nearly as swiftly as was projected when the budget cutting began.
The push for immediate debt reduction has resulted in some perverse policy outcomes.
Evidently, it cannot be said enough: The evidence points to the failure of austerity as a plan for growth.
In the US, we learned Friday that nearly 12 million remain unemployed and 4.4 million have been out of work, searching for a new job for at least six months. The sad truth is that the long-term may have an uphill battle finding a job. According to an as-of-yet unpublished paper by Rand Ghayad, visiting scholar at the Boston Fed and a PhD candidate in economics at Northeastern University, being long-term unemployed puts a job applicant at more of a disadvantage than not having relevant experience in terms of their likelihood of getting a call back for an interview. Yet, even though we have an historically high number of people who are long-term unemployed, too few policymakers have prioritized job creation over slashing budgets.
Leaving millions to toil in unemployment should never have been seen as an acceptable policy. However, given the evidence that austerity didn’t even solve the problems its adherents said it would solve, we really do need a reset.