Nobel Prize-winning economist Joseph Stiglitz offers this assessment of Republican efforts to get the budget under control by--in essence--eliminating the U.S. government:
"As Greece and others face crises, the medicine du jour is simply timeworn austerity packages and privatization, which will merely leave the countries that embrace them poorer and more vulnerable. This medicine failed in East Asia, Latin America, and elsewhere, and it will fail in Europe this time around, too. Indeed, it has already failed in Ireland, Latvia, and Greece ...
"The financial markets and right-wing economists have gotten the problem exactly backwards: they believe that austerity produces confidence, and that confidence will produce growth. But austerity undermines growth, worsening the government’s fiscal position, or at least yielding less improvement than austerity’s advocates promise. On both counts, confidence is undermined, and a downward spiral is set in motion."
Stiglitz offers a solution: "An economic-growth strategy supported by the European Union and the International Monetary Fund. Growth would restore confidence that Greece could repay its debts, causing interest rates to fall and leaving more fiscal room for further growth-enhancing investments. Growth itself increases tax revenues and reduces the need for social expenditures, such as unemployment benefits. And the confidence that this engenders leads to still further growth."
How often have we watched in horror as companies--media companies in my case--tried to cut their way to profitability, firing their best employees, degrading their product, shrinking their markets? Congress' Republicans with their astonishingly stupid anti-tax pledge and some conservative Democrats will gut the essence of American spirit and security while giving the wealthy a free ride and securing their own positions.
The only solution here is a combination of program cuts and tax increases in strategic spots (ask Bill Clinton, who did both and left a huge surplus, which George Bush quickly dumped in the toilet--smiling that dim-bulb smile of his). Ask George Bush Sr., who implemented surgical tax increases--at the cost of his presidency--and cut Reagan's deficit severely. What he did was correct, brave and costly to him.
Slash and burn might be good in a teenage horror movie, but it's lousy government.