Austerity Not a Solution

TheRealNews

Roughly 18 months after governments throughout the world, including the U.S., enacted large-scale deficit financing policies to counteract the Great Recession, a new wave of opposition to large-scale fiscal deficits and support for austerity policies has emerged. PERI Co-Director Robert Pollin reviews the four main arguments developed by various leading deficit hawks: 1) large fiscal deficits will cause high interest rates and inflation; 2) deficits are eroding business confidence; 3) the multiplier for fiscal stimulus policies is close to zero; and 4) we are courting disaster with huge long-run deficits. Pollin argues that none of these deficit hawk positions stand up to scrutiny. He also shows that by critiquing the four deficit-hawk positions, we can bring greater clarity to workable recovery program now.

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