Austerity and Obama’s Alter World

More and more is being written during this presidential campaign about Europe and austerity. Only the Democrats have added a twist to the discussion: it’s now the Republicans who are acting like irresponsible Europeans and they must be stopped.

Now you might think that this line of criticism is an extension of Obama’s up-is-down claim that he is the fiscal conservative in this election but if you do you’d be wrong. It’s the double switchback: the Republicans are trying to import the European economic remedy of Austerity and look how that’s working out in Greece. In other words if America votes Republican the mere mention of cuts in public spending (which is about what European Austerity amounts to thus far) will provoke massive public union strikes and riots in the streets of [Oklahoma City, OK?]


As I’ve mentioned before part of what I find so fascinating about campaigns (and this one in particular) is trying to understand whom they’re targeting with different approaches. For example the Anna Wintour thing is classic.

This Republican Austerity tack however is much more in line with the irrational base arguments of the Democratic party. Taken on its face Obama’s economic policy consists of endless Keynesian economic stimulus–that in a few short years has pushed our national debt to well over 100% of GDP with no GDP growth to show for it (in a normal universe that might be what would draw the comparisons to Greece and the rest of Europe) and threatens to propel us towards a Japanese-style debt trap and permanent economic stagnation–now combined with a permanent casting off of even the notion that anyone ever has to pay for it.

We’ve been hearing the arguments for stimulus for a while now (e.g., Krugman). But the recent leap to demonizing Austerity and the Republicans in one stroke is at once completely irrational and politically masterful–at least on the latter with respect to energizing its base. Why? If what you know about the markets and the economy comes from the pictures in the Money section of USA Today then this is compelling stuff. Austerity = Riots. Of course the actual equation looks more like this: The Threat of Not Increasing Public Expenditures for Some Brief Period = Rioting and Strikes in Countries Where Debt-to-GDP > 125% and More People Are On the Public Dole Than Are Not.

This happens to be one very good reason not to vote for Obama in November. While government tends to get inexorably bigger under either party there is no doubt that the Democrats are unabashed in making their intentions clear–and we have witnessed what they can accomplish in just a few short years under a leftist administration. Given 4 more years of Obama we may, and probably will, fit squarely within the above Greek equation. And that is precisely what Obama wants–complete dependence on the state. For the Greeks there is no going back.

The Dems have jumped right over the discussion of the merits of stimulus and instead have thrown down the there’ll-be-blood-in-the-streets-if-we-don’t-stay-on-the-crazy-borrow-and-spend-path-we’re-on card. They do offer one little caveat: if you’re not one of the ones who would turn over police cars and riot in the streets then they want to raise your taxes.

In Obama’s universe they can have your cake and eat it too. You can hand it over peaceful-like or you can do it with a fight but they’re going to take your cake. Might as well give it to them and maybe they’ll save you a piece. Or so the argument goes.

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