The Austerity Bomb

The “fiscal cliff” is definitely the worst term for a constructed policy impasse, but I’m not sure how I feel about “austerity bomb.”  Brian Beutler at Talking Points Memo used the term in an article earlier this week:

Automatic, across-the-board reductions to domestic and defense spending, combined with the looming expiration of the Bush tax cuts, will dramatically consolidate the budget in the next calendar year, if Congress does nothing. And despite bemoaning deficits throughout the Obama years, the GOP’s suddenly come around to the view that cutting government spending is a job killer.

If all the fiscal tightening scheduled for the beginning of the year is allowed to take effect, it will take a huge bite out of the projected deficit for the coming fiscal year. Unfortunately, it’ll take a similarly large bite out of GDP — enough to threaten a new recession. And the resulting job losses would reduce tax revenues and increase spending on jobless benefits enough to undo billions of dollars in direct deficit reduction.

Republicans are focused on maintaining defense spending, but that’s not the only spending that matters, according to the CBO study cited by Beutler. Krugman highlighted the term in his next column, pointing out that the fiscal cliff frames the problem (and the solutions) in a particular way:

The cliff stuff makes people imagine that it’s a problem of excessive deficits when it’s actually about the risk that the deficit will be too small; also and relatedly, the fiscal cliff stuff enables a bait and switch in which people say “so, this means that we need to enact Bowles-Simpson and raise the retirement age!” which have nothing at all to do with it.

Austerity brings to mind the unfolding disaster in Europe, an acknowledgement of the kind of deprivation already being visited on local governments in the U.S. The Washington Post is adopting the term “austerity crisis,” eloquently framed by Suzy Khimm (and affirmed by readers of Wonkblog, Ezra Klein’s policy blog on the Post). The fiscal cliff itself would mean huge deficit cuts come January 1. The deficit isn’t the crisis, it’s austerity that would be imposed by the cuts, austerity that most observers (including the CBO, and anyone reading the news about Europe) think could plunge the economy into recession. As Khimm writes:

The essential dilemma, as both the U.S. and European countries like Greece have begun to discover, is that weak economies don’t respond well to immediate austerity measures. The deficit hawks arguing for a bipartisan “grand bargain” or similarly ambitious deficit-reduction plan want to replace the kind of austerity that we’re facing now with austerity that takes effect further down the road, not undo it altogether. Others simply want to put austerity off for at least a year by extending all the tax cuts and suspending the sequester.

All of these solutions affirm one underlying truth: The reason the fiscal cliff is so scary is that it’s an austerity crisis.

I’m no expert on federal spending, tax policy, or deficits (I study cities, which aren’t allowed to run deficits). But I’m very interested to see how the conversation changes once there is more public discussion of austerity: the austerity already imposed and the austerity to come. We’re well beyond discussions of efficiency and government waste and the metaphors we’ve used to cover up the drastic cuts of the past four years.

As Salon summarized the trend: “Austerity metaphors matter.” It will be interesting to see if they start circulating outside the world of newspaper columnists. How would the idea of austerity poll?