why do conservatives want the US to be like Europe?

Spending cuts, spending cuts, spending cuts!

Austerity is all the rage since the GOP took over the power of the purse in 2010. If that's not enough, Democrats agreed to lower, Republican levels of spending during the last debt-ceiling showdown in October 2013 and were confronted with even lower levels of spending. With another debt-ceiling fight looming on the horizon, will Republicans look to cut even more?

Have they not learned anything from Europe? For the less informed, Europe has been practicing intense Austerity for the last few years on a conservative economist's warning that government debt should not exceed 90% of GDP. How is that working?

Facts on Eurozone Austerity:

Austerity is the policy of excercizing harsh spending cuts (sometimes with accompanying tax increases) to control government debt. The entire Eurozone is practicing Austerity to deal with government debt whoas.

-The UK's GDP has shrunk 6% in 3 years due to Austerity. This equates to roughly $5,400 less income per household-
-The average government debt in the Eurozone has increased from 83.3% to 92.2% through 2012-2013Q1, despite strict austerity policies
-Unemployment has increased to a whopping 12.2%.



Surprise?

Why does anyone in the US think this is a good idea?

 

Perhaps because Europe is headed a bad way economically that they can't necessarily get out of.

Europe's productivity of late has not been so stellar. France and Germany are the only ones who still have good economies, the rest of them are basically just leeching off those two.

 

Just like some states in your union. But you wouldn't call that welfare.

 

I don't support that kind of leeching in general. They need to be forced to clean up their act, not endlessly kept on life support.

Also I'm not American so it's not my union.

 

Even Germany is losing economic output due to Austerity.

Europe was in a recession and decided that increasing taxes and slashing services was the way to combat government ballooning in debt...

 

Yes, in the short term austerity causes pain. But in the long term, it will benefit the country. A continued spending spree only prolongs the inevitable. And when the inevitable happens, the crash is much worse. It's the difference between a controlled crash, and an out of control crash. Aviators know the difference. Many non-aviators do not.

 

The austerity isn't necessarily the problem, it's that the Germans themselves aren't big enough consumers to maintain the society they want so they have to export tons of stuff, and when everyone else doesn't want to buy, they suffer.

But it is true - if you want to stop debt, you slash spending. Of course this has repercussions for private sector debt, but it still works.

 

I could believe that if we've seen evidence of it.

Austerity has NEVER solved debt issues. Spending has. Growth reduces debt burden, not economic contraction through austerity.

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So, just to clarify.. it is good for the government to shrink its private sector economy to manage its finances? How is that good for the people or businesses?

 

As the government spends more money it necessarily has to tax more, not because it has to have those funds per se since money can just be created out of nowhere, but because it they don't there's massive inflation. As a consequence they suck more money out of the private economy. For example, if the US keeps going the way it's going eventually the only way it will keep itself afloat is to take almost all of everyone's money.

 

While I'm impossible to label, which means I'm not a "conservative" per se, the issue is simple. Our national debt is humongous, and getting bigger at an exponential rate. There is NO WAY to increase taxes enough to cover the spending. So, if it matters that we have to pay off the debt, eventually (even if eventually is so far off in the future that all presently living humans are long since dead), we have to stop digging the whole deeper. If it doesn't matter (and some really smart really believe it doesn't), well, then it doesn't.

 

You'll believe it when our credit rating is downgraded to junk. It's already been downgraded once. If we don't get our budget in order soon it can happen again. Just how long do you think we can continue to spend beyond our means? In order to pay down the national debt, we have to not only balance the budget, but create a surplus which can be used to pay down the national debt. And just where do you think that surplus will come from? Our population is growing and demands are increasing. And yet I hear very little constructive solutions to solve this problem. And let's not forgot, 10,000 baby boomers have been retiring at 65 every day now for the past 3 years if you use the stats that baby boomers were born in 1945 and continued to 1965. I truly believe many people have just not given this a lot of thought.

 

Just to be clear, you can't pay all the debt off or the government will have no money.

Don't ask why. It will make you a cynic about the entire structure of society. Unless you're like the progressives on here who love it because it's designed to give the people who run it more and more power.

 

Yes, I actually get that, but at some point, merely SERVICING the debt becomes impossible. Then what?

 

The whole thing collapses. But no one cares right now because while it's still running the people running it are kings of the world.

 

It costs us 3% of GDP / year to service the debt, but 17.9% of GDP / year to service the health care of our citizens (source, 2012 budget data). Tell me which one is headed to impossibility first?

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Governments do not ever have to pay off debt. It is continuously rolled over. It has to be. The government needs debt to "create" money through the banks.

 

Austerity isn't a good thing in a recession. There ought to be no major cuts when the economy is down, but the taxes shouldbe cut. Then when the economy get's back, gradually cut back on public spending and pay back the debt.

 

That will be interesting to experience, to say the least. Wonder if I'll still be alive?

 

A lot of the reason for Europe's woes is that they have unrealistic pension systems. Public workers, in particular, get generous benefits in many countries. Greece's system was one of the worst in financial insolvency.

At the same time, if you decrease spending in these benefits, then it's hard to fix things among people used to living off of the system or for people who previously didn't have any reason to plan things out on their own terms.

Social programs in and of themselves aren't a bad thing, but there are reasonable limits to them, and the larger a program is, the more that the average person should pay into the system to keep it solvent. Many European nations didn't effectively tax their populations. Greece and Portugal have massive shadow economies that evade taxation, as does Italy.

So, while austerity hasn't worked for much of Europe, it's not really austerity alone that has demonstrated failure. The problem is that austerity doesn't address the root causes of the problem -- tax evasion and unrealistic budgeting.

On a much smaller scale, the city of Detroit experienced something similar with public pensions.

 

Probably not.

 

You are kind of missing the boat. Austerity doesn't cause a recession, it causes a double-dip recession. The Eurozone isn't bankrupt due to austerity, it is staying bankrupt because of austerity.

The City of Detroit is a fundamentally flawed example. The city of detroit doesn't regulate the economy like a federal government does.

 

Do you say that because you think it's a LONG way in the future, or because you think when it comes, it will arrive with widespread death and destruction?

 

Not a loooong way, but it's not imminent or anything. We're just getting to the point now where we can see how things will end.

At least I hope I'm dead before it crashes....I really, really don't want to be wrong about that.

 

Europe doesn't have a whole lot of choices because of the debt they face.

Going further into debt degrades the value of their currency. At best, they can reform their tax collection methods and try to restructure their benefits projections.

 

Well, given my opinion of the true nature of who and what we are from a spiritual perspective, I believe we have chosen to be alive during this time, knowing, ahead of time, what was in store for us for this particular life. So I try not to worry about such things. But I do agree, it's not imminent.

 

Apparently you've never heard of inflation.