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March 07, 2013

Government Spending and the Endless Recession: Cut Spending Now

Japan tried what Obama is trying. It failed.

Other nations slashed spending and prospered.

As Boskin points out, the Netherlands in the mid-1990s and Sweden in the mid-2000s "stabilized their budgets without recession [with] $5-$6 of actual spending cuts per dollar of tax hikes."
And he notes that Canada reduced government spending in the mid-1990s and early 2000s by an amount equal to 8 percent of gross domestic product.

Those cuts weren't painless, but they put Canada on a trajectory different from ours. Canadian voters value budget surpluses, and Canada managed to avoid almost all the bad effects of the 2007-09 recession.

Why isn't the political class interested in this? Because while a defanged political class may serve the interest of the public it doesn't serve the interest of the political class.

posted by Ace at 02:20 PM

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As Boskin points out, the Netherlands in the mid-1990s and Sweden in the mid-2000s "stabilized their budgets without recession [with] $5-$6 of actual spending cuts per dollar of tax hikes." And he notes that Canada reduced government spending in the mid-1990s and early 2000s by an amount equal to 8 percent of gross domestic product. Those cuts weren't painless, but they put Canada on a trajectory different from ours. Canadian voters value budget surpluses, and Canada managed to avoid almost all the bad effects of the 2007-09 recession. Why isn't the political class interested in this? Because while a defanged political class may serve the interest of the public it doesn't serve the interest of the political class. posted by Ace at 02:20 PM \| Access Comments <script language="javascript" src="http://adserver.adtechus.com/addyn/3.0/5235/1131537/0/170/ADTECH;loc=700;cookie=info;target=_blank;key=key1+key2+key3+key4;grp=[group]"></script><noscript><a href="http://adserver.adtechus.com/adlink/3.0/5235/1131537/0/170/ADTECH;loc=300;key=key1+key2+key3+key4;grp=[group]" target="_blank"><img src="http://adserver.adtechus.com/adserv/3.0/5235/1131537/0/170/ADTECH;loc=300;key=key1+key2+key3+key4;grp=[group]" border="0" width="300" height="250"></a></noscript>	Recent Comments ALH: "Read the content, watching the rally, all with one ..." Bandersnatch: "The Bay of Pigs Award? ..." Insomniac: "Number 1? Dammit. ..." jmel: "If PDT doesn't punch Schumer in the face on the fl ..." Misanthropic Humanitarian: "Not bad. You? ..." Ladyl: "Happy Monday, Horde!!! ..." 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