Across the European Union today, hundreds of thousands of workers have taken to the streets in the largest ever coordinated day of strikes and demonstrations against austerity budgets. General Strikes are underway in Spain, Portugal, Greece and Italy in protest of programs of raised tax and spending cuts. Meanwhile Nobel Prize-winning economist Paul Krugman used his column this morning to remind Americans that this country is facing an austerity crisis of its own.
Krugman argued for reframing the idea of a "fiscal cliff" in terms of an "austerity bomb" (a term he attributes to Brian Beutler). His (ever-Keynesian) point is that we do not risk tumbling off some metaphorical cliff of towering deficits -- far more threatening is an explosion of austerity. Krugman wrote:
The cliff stuff makes people imagine that it’s a problem of excessive deficits when it’s actually about the risk that the deficit will be too small; also and relatedly, the fiscal cliff stuff enables a bait and switch in which people say “so, this means that we need to enact Bowles-Simpson and raise the retirement age!” which have nothing at all to do with it.
Krugman is not alone in challenging the fiscal cliff language. Ezra Klein on Tuesday noted that the Washington Post's Wonkblog preferred the term “austerity crisis,” while his readers gave him other appropriate suggestions too.
"We literally got hundreds of nominees," noted Klein, listing a few of his favorites:
- “Policy Meltdown”
- “What would really happen if we really cared about deficit reduction, and why we really don’t.”
- ”Catch 2012″
- “Fiscal staircase”
- “The Big Lebowski, cause everything is screwed up and is a big charade.”
- “Call My Bluff Bluff”
Suzy Khimm at the Post, who argued for the term "austerity crisis" instead of "fiscal cliff," pointed out last week that in forthcoming U.S. budget negotiations, both Democrats and Republicans are pushing for austerity programs -- just with different time frames and details. She wrote:
The essential dilemma, as both the U.S. and European countries like Greece have begun to discover, is that weak economies don’t respond well to immediate austerity measures. The deficit hawks arguing for a bipartisan “grand bargain” or similarly ambitious deficit-reduction plan want to replace the kind of austerity that we’re facing now with austerity that takes effect further down the road, not undo it altogether. Others simply want to put austerity off for at least a year by extending all the tax cuts and suspending the sequester.
All of these solutions affirm one underlying truth: The reason the fiscal cliff is so scary is that it’s an austerity crisis.