Basically, this was like when, in the George W. Bush White House, scientific studies were withdrawn or rewritten because they didn't say what Republicans (and their oil company financiers) wanted to be said about global warming.
To boil all of this down now: austerity during a sluggish economy causes the economy to contract, and that contraction causes people's incomes and spending to decline, and that causes taxes into the Federal Government to decline, and that decline in tax-income into the government causes its deficits to soar, and that, long-term, causes the government's debt to soar.
The time for austerity is thus when the economy is booming, which was what Bill Clinton did during boom-times, when he increased top-end taxes and reduced government spending. But we're not in boom-times now. In order to restore boom-times, we would need to do what FDR did starting in 1937, and which worked during the last Great Depression: massive federal spending increases on infrastructure and public welfare, precisely what the Republican Party fights against, and what our Republican-Democratic President Barack Obama refuses to fight for, but does give sporadic lip-service to (while not giving even a hint of the now enormous empirical economic evidence for it).
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Republican Congressman Kevin Brady of Texas is the new Chairman of the Joint Economic Committee of Congress, and he is leading the Republicans' charge on this matter. In the Republican magazine National Review, he headlined on 21 February 2013, "What Kind of Cuts Grow the Economy?" (which assumes that some kind of cuts do "Grow the Economy"), and he argued that, "Time and again, economic studies have shown that countries that reduce their government deficits through spending cuts -- rather than tax increases -- can boost economic growth and job creation even in the short term." He cited as his source there the report that his own office had produced for the Joint Economic Committee Republicans, "Spend Less, Owe Less, Grow the Economy," which was dated 15 March 2011. However, he ignored the much more recent report from the Congress's own nonpartisan research arm, the Congressional Research Service, which was dated 11 January 2013 and titled "Can Contractionary Fiscal Policy Be Expansionary?" which stated boldly, "This view [i.e., Brady's] contrasts with that held by most economists and found in conventional models. In those models, cutting spending will contract the economy. Chairman Bernanke of the Federal Reserve was referring to this view when he cautioned against large and immediate spending cuts." The CRS study (which Brady and other Republicans ignore) went on to cite grave deficiencies in the studies that Brady was relying upon. For example, the CRS report noted that a 2010 study from the IMF, "Macroeconomic Effects of Fiscal Consolidation," which was much more comprehensive than the chief study that Brady's report had relied upon (which was issued in 2009), obtained results that "are consistent with the mainstream view of fiscal policy" and it found "that deficit reduction has a contractionary effect on output, with deficit reduction equal to 1% of GDP reducing output by 0.5% of GDP." Furthermore, "Some recent analyses have questioned the applicability of Alesina and Ardagna's findings [the findings in the 2009 study upon which Brady's JECR report had chiefly relied] to the current U.S. fiscal situation."
Perhaps in order to provide another means of repudiating Keynesianism so as to embrace the sequester cuts, Brady's "Spend Less, Owe Less, Grow the Economy" report also misrepresented what Keynsianism itself actually is. His summary of the "Keynesian View" didn't even so much as mention the Keynesian "multiplier," which is at the core of Keynesian economics, and which the new IMF study, "Growth Forecast Errors and Fiscal Multipliers," had examined in detail, and had re-estimated upward, when it had concluded that the IMF itself had previously underestimated the effectiveness of Keynesian policy -- which depends upon there being a large enough "multiplier effect" from deficit spending on infrastructure and other government investments. Rather than so much as even just mentioning the "multiplier," Brady's report -- the official Republican analysis -- simply assumed that Keynesianism relies instead upon the discredited theory that, as he put it, "additional government debt "crowds out' private investment through a higher real interest rate." However, that "crowding out" theory actually goes back instead at least as far as Malachy Postlethwayt's 1757 Great Britain's True System, which stated: "The national Debts first drew out of private Hands, most of the Money which should, and otherwise would have been lent out to our skillful and industrious Merchants and Tradesmen: this made it difficult for such to borrow any." The "crowding out" theory had nothing to do with Keynesianism, which was first formally introduced into economics in 1936, in John Maynard Keynes's The General Theory of Employment, Interest and Money. If anything, Keynes's theory would even suggest that such "crowding out" of private investment by public investment would be only short-term, and that the long-term result (whenever there is underinvestment generally) would be for it to boost private investment.
So: Republicans and other conservatives are now left with attacking Keynesianism by misrepresenting what it is, and with defending a fraud by two of their economists, and with ignoring consistent mountains of accumulating empirical evidence, all contradicting conservatives' claims.
However, since the international aristocracy is unalterably determined to fool the publics everywhere into believing that austerity is the path to restore the fiscal soundness of nations whose economies are depressed, we shouldn't expect science to get in the way of fraudulent and other false economics and economists.
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