This is a story that deficit hawks won't talk about. They all say that Greece is going to fail, which may be true, but they attribute that failure to what happened before Greece adopted an "austerity-only" approach to fixing their economy. As this article points out, their solution has caused much more damage than what it was meant to fix.
Greece ended up with too much debt after borrowing to cover government costs (they didn't raise taxes, or were unable to). Then, when their debt got so big that they began to default, they started trying to cut back with austerity. Meanwhile, the financial crisis in Europe drove down the value of the euro and drove up interest rates, putting Greece in an even worse position. In response, they tried even greater austerity measures.
Now, here in America, we watched all of this. Not too long ago, financial experts were saying that Greece could claw its way back if it just kept cutting. Well, some said that. Others disagreed. What matters, though, is that Greece slashed everything. They cut their spending down to drastic levels. In the theory of austerity, this should have created a boom that echoed through Europe, cleared up the debt crisis somewhat, and put Greece back in the black.
As we have seen, though, this has not happened. And what's more, things have gotten worse. With less funding, schools, hospitals, and public services can't operate to meet the growing needs of people who are suffering under an unemployment rate that jumped from 13% to 18% in a year. A year! A year of austerity. People can't get access to the public health program because its funding was slashed. There is a notable increase in crime, suicides, and drug use. And all of this means that Greek citizens aren't able to buy like they used to, driving sales downward and causing major problems for their markets. They are in a tailspin, and even the most optimistic experts now say that they are a hopeless case.
This is what austerity does to an economy. In America, we have a whole political party that prides itself on wanting to reduce the budget, cut the deficit, slash spending, etc. While some cuts may be a good idea, all-out austerity is a poor choice. In tough economic times, cutting government is not the answer, because more people rely on the government in those times. These are not people who want to be beholden to the government, but their only choice is to do that or to starve. When times are good, we can get away with reducing the budgets for things like unemployment and food stamps. But when you have record numbers of people who rely on these, it's foolish to say we need to cut them. Cutting those programs doesn't encourage people to find a job that isn't there.
Austerity measure are not the answer, especially when the economy is so rocky. Cuts can come when the economy is doing well, but we must allow the government to support us through the rough patches. Reducing government's supports for the American people when they need those supports the most is a foolish decision. I hope that this is not the course the country will be taken in. The consequences could be and will be dire.