U.S. now on pace for European levels of austerity in 2013 [View all]

[HiPointDem]

For years now, economists like Paul Krugman have been criticizing countries in Europe for engaging in too much austerity during the downturn — that is, enacting tax increases and spending cuts while their economies were still weak.

But after this week’s fiscal cliff deal, the United States is now on pace to engage in about as much fiscal consolidation in 2013 as many European nations have been doing in recent years — and more than countries like Britain and Spain...

So how does the sheer scale of the U.S. austerity program for 2013 compare to what European countries have been doing over the past few years? We can get an approximate sense by looking at this paper from the European Trade Union Institute on the size of Europe’s various fiscal consolidation programs. A few comparisons:

https://docs.google.com/spreadsheet/oimg?key=0AoSDSGwq-KBTdGpwbEZId2l4UzEyYTJqdVJ4TW81bmc&oid=1&zx=ewa8ytksbxid

Britain has earned a lot of criticism for its austerity programs in the past two years. But at a total size of 1.5 and 1.6 percent of GDP, each of those two deficit-reduction years were smaller than what the United States is planning this year. The United States is also planning to cut and tax more heavily this year than Spain did in 2010 and 2011. Or France. That said, we’re nowhere near Greek or Portuguese or Irish levels of austerity...

Either way, Congress is starting to tighten fiscal policy this year.

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/01/02/the-u-s-is-now-planning-more-austerity-than-europe/