Salon.com > Austerity Measures

Meet the grad student who upended the GOP

Sun, 21 Apr 2013 13:00:00 +0000

The world of economics has just changed, and somebody has some 'splaining to do! Please savor the following twisted tale of bad math, academic folly and pundit hubris.

Since 2010, the names of Carmen Reinhart and Kenneth Rogoff have become famous in political and economic circles. These two Harvard economists wrote a paper, “Growth in the Time of Debt” that has been used by everyone from Paul Ryan to Olli Rehn of the European Commission to justify harmful austerity policies. The authors purported to show that once a country's gross debt to GDP ratio crosses the threshold of 90 percent, economic growth slows dramatically. Debt, in other words, seemed very scary and bad.

Their historical data appeared impressive, as did their credentials. Policymakers and journalists cited the paper to convince the public that instead of focusing on the jobs crisis that was hampering recovery, we should instead focus on deficits. The deficit hawks jumped up and down with excitement.

But something didn’t smell right.

Paul Ryan unleashes austere budget plan

Tue, 12 Mar 2013 12:57:00 +0000

Rep. Paul Ryan, R-Wis., chairman of the House Budget Committee, released the framework for House Republicans' budget plan in an Op-Ed for the Wall Street Journal on Tuesday, outlining how he would slow spending, repeal Obamacare and make cuts to Medicare and Medicaid.

From the Op-Ed:

Under our proposal, the government spends no more than it collects in revenue—or 19.1% of gross domestic product each year. As a result, we'll spend $4.6 trillion less over the next decade.

Our opponents will shout austerity, but let's put this in perspective. On the current path, we'll spend $46 trillion over the next 10 years. Under our proposal, we'll spend $41 trillion. On the current path, spending will increase by 5% each year. Under our proposal, it will increase by 3.4%. Because the U.S. economy will grow faster than spending, the budget will balance by 2023, and debt held by the public will drop to just over half the size of the economy.

Spain dances with chaos

Sun, 25 Nov 2012 00:00:00 +0000

Among the global superbrands radiating out from Madrid’s famous Puerta del Sol, the real growth industry is also Spanish history’s cornerstone commodity: gold. There are about 15-20 guys, none of them white, wearing sleeveless yellow fluorescent waistcoasts over their winter sweaters, plastered all over with the all-caps legend COMPRO ORO. I buy gold. Five hundred years after Spain subjugated large portions of the world and built its palaces on plundered gold and silver (by the 16th century, the equivalent of US $1.5 trillion’s worth), selling the family jewels has become a grim zeitgeist boom economy through bitter necessity.pictures by author