Those on the talk radio circuit have been issuing dire warnings for years now about Obama's economic policies. Specifically, they have been screaming about the deficit and debt, claiming we need austerity measure NOW, and Obama's unwillingness to cut social programs and increase the tax base are sure signs that he wants America to fail. They have said (I've heard it from Rush, Glenn, and Howie Carr at various times) that inflation is on it's way, bigger and badder than ever before. Any minute now...any minute....
Well, that hasn't happened, at least not due to the debt. We are seeing inflation pick up a little, but not overwhelmingly, and not because we are wallowing in debt (which we're not really). The inflation we're seeing is mostly because of gas prices which are driving up the cost of everything. However, that's a factor that is not within our control. At least, not without major renovations to our energy system. So, should we be thankful that the POTUS has not seen fit to chop our government to pieces over debt worries? I certainly think so. And Paul Krugman agrees with me.
This is the man who knows what's going on, and can make it easy to understand. All you have to do, according to Paul, is look at Europe. There, austerity is the name of the game, and they are heading for another recession. If anything is going to harm the US economy, it's a failing Europe. And why are they failing? Didn't they incorporate austerity? Well, those guys on the radio will tell you that it's because they're socialist nations who've borrowed their way into a hole to pay for all their programs, and now they're feeling the heat. Well, that would explain it, but then why isn't America in the same boat? Aren't we wallowing in debt as well? They say our crisis is just around the corner, or that it's already here, but the kinds of issues we're seeing in Europe just aren't materializing here. Why?
The short answer is, because we played it smart. We are still supporting our citizens, we haven't cut social programs, and we're attempting to balance the budget with minimal impact on lower-income families. We're not jumping into austerity; we happen to be moving toward prosperity again.
The only issue, of course, is that there has been local austerity, towns and counties that have cut spending to the point where they can barely run their own governments. Spending is so low in some places that firefighters won't respond to firefighters, and governments can't hire people to count their votes for the upcoming elections. The underside of austerity is that it will bring government and societies to a standstill. It will cripple any kind of forward movement.
And a word on our deficit and debt. The majority of the debt we hold is debt we owe to ourselves. We do owe a lot of other countries, but the amount of money we would make from expanding the tax base is miniscule compared to the amount we would make if we raised taxes on the wealthy by 1% and closed loopholes. I know that those solutions put me on the "liberal" side of things, but I don't care about that. It's a solution to the problem, in fact the only solution that is backed by economic evidence that shows it is a sound idea. If we were to cut spending only, there would be no surge in consumer confidence. Such a view is rooted in the misconception that small government is good for big business. We must seek to reverse this thinking if we are going to set our course for the next few years and keep our ship from sinking.