So Is Austerity Now a Problem?
washingtonmonthly.com — One of the more darkly entertaining things to watch in Washington right now is the dance of those who are alarmed about the pending March 1 “sequestration” of defense funds trying to make their case without admitting the underlying principle that public-sector austerity (defense or non-defense) is bad for a still-deflated economy. The job of reconciling these points of view got harder today with the release of databy the Commerce Department suggesting that drops in federal spending were mainly responsible for plunging the four quarter GDP numbers into the red. First quarter GDP estimates are already being depressed by the growing impact of the payroll tax increase that hit on January 1, which a lot of people just didn’t anticipate. It’s awfully tempting to argue for a delay in the defense sequester on “stimulus” grounds—if you are the kind of politician who hasn’t abundantly estopped any such argument with prior shrieks about deficit spending being the economy’s main problem.