Spending cuts and the threat to democracy

What America should learn from Europe and the Middle East.

The "sequester", which began on 1 March, is the American form of austerity, or cut-backs in government spending during a recession. Austerity, or stingy government in Europe has kept employment extremely depressed compared to what it would have been with government stimulus, as Paul Krugman argues.

On Saturday, there were massive protests throughout Portugal against Scrooge policies by the government, which have so destroyed the country’s economy that 2 per cent of the population has fled abroad for jobs in the past 2 years alone. On Friday, Greek workers staged a huge general strike. In Italy, anti-austerity feeling made grumpy comedian Beppe Grillo and his party the swing vote in the new parliament. Grillo may single-handedly destroy the eurozone. European newspapers rather amusingly demanded that Grillo now "take responsibility" and "tell us what he wants". He is a contrarian comedian. It would be like having Robin Williams or Tracy Morgan as the swing vote in Congress, with the press hounding them for their agricultural policy and asking them about the dangers of deflation. But Grillo's ascendancy, while less alarming than the resurgence of the Greek far right, is a manifestation of the rejection by the Italian public of the long dreary road prescribed by the "troika", (The International Monetary Fund, the European Union, the Central Bank), of further government cut-backs, reductions in minimum wage, high unemployment, no hope.

While for some odd reason the Middle East does not usually get analysed with the same social science tools as Europe, the political crisis in Egypt is related to the Muslim Brotherhood government’s austerity program. The latter, as Samuel Knight argues, is being pursued under pressure from the International Monetary Fund. Secretary of State John Kerry is in Cairo, also urging acceptance of the austerity program. Austerity is estimated to have reduced Egyptians’ real income by 3 per cent in January alone. Tunisia is doing better than Egypt economically, but the parliament, dominated by the religious Right, is also tempted by austerity measures, seeking to trim a point off the budget deficit this year while seeking 4.5 per cent growth. While letting the value of the Tunisian dinar fall would hurt consumers with regard to imported goods, it would make Tunisian textiles and tourism more affordable for those abroad. Tunisia's exports are hurt by European economic problems, and the country would do well to develop more Asian customers (Brazil has had success reorienting exports to the Pacific Rim). Likewise, although Yemen's economy improved in 2012 after a 10 per cent drop in the revolutionary year of 2011, if anything the government budget deficit of 5.5 per cent is not big enough to stimulate the economy properly.

Reducing the state budget at a time of economic contraction is the opposite of what the great economist John Maynard Keynes prescribed. When the economy is in the doldrums, the businesses are skittish about investing their money, and so keep it in the bank. The only force, Keynes argued, that can and will risk putting a lot of money into the economy during a deep recession is the government. Of course, the government has less money at that point, too, since tax receipts are reduced. So it will simply have to spend money it doesn't technically have, i.e. go into deficit and print extra paper money. The extra paper will, obviously, lose some of its value. But that loss can have benefits, too, since it will make the goods produced by the country less expensive abroad, and spur exports.

This argument is straightforward for most countries, and it is mysterious why European and some Middle Eastern governments reject it. It is complicated in the US by the position of the dollar as a reserve currency and by the fall of manufacturing to only 20 per cent of the US economy. The former means that large budget deficits don't necessarily reduce the dollar's value significantly, because the US only holds about a third of the world's dollars and there is a lot of confidence in its value. The latter means that even when the dollar falls against the yen or euro, the jump in exports is limited to a fifth of the economy and domestic services don’t get much of a boost. But actually these peculiarities of the US economy are not arguments for austerity; on the contrary, the reserve dollar allows the US to do stimulus without as much pain as one would otherwise expect.

Instead, the Tea Party has forced the US into an artificial crisis with the "sequester", taking $100bn a year out of the economy for the next ten years, which will cut half a point of economic growth and harm workers, keeping unemployment high – not to mention the harm it likely will do to medical research, higher education, etc. That this austerity is being pursued by the GOP in part in hopes of disillusioning voters with President Obama in his second term is fairly obvious, but it is also in order to protect the 2003 Bush tax cuts for the wealthy, 80 per cent of which have been retained. Sequester, as usual with these things in the US, is actually a tax on the middle classes to benefit the wealthy, since it preserves undeserved tax cuts for the latter by reducing government services for the former.

That austerity does not work economically should be clear. But that it creates populist discontents that are shaking southern Europe and could derail Middle East democratisation is even more alarming. The world needs stimulus, not Scrooge government if it is to pull out of the crisis kicked off by corrupt bankers in 2008.

This is a cross-post from Juan Cole's blog Informed Comment

Barack Obama holds a cabinet meeting at the White House on 4 March. (Photo: Getty.)
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America’s domestic terrorists: why there’s no such thing as a “lone wolf”

After the latest attack on Planned Parenthood in Colorado Springs, America must confront the violence escalating at its heart.

First things first: let’s not pretend this is about life.

Three people have died and nine were injured on Friday in the latest attack on a women’s health clinic in the United States. Planned Parenthood in Colorado Springs was besieged by a gunman whose motives remain unclear, but right-to-lifers—who should really be called “forced birth advocates”—have already taken up their keyboards to defend his actions, claiming that women seeking an abortion, or doctors providing them, are never “innocent”. 

This was not unexpected. Abortion providers have been shot and killed before in the United States. The recent book Living in the Crosshairs by David S Cohen and Krysten Connon describes in sanguine detail the extent of domestic terrorism against women’s healthcare facilities, which is increasing as the American right-wing goes into meltdown over women’s continued insistence on having some measure of control over their own damn bodies. As Slate reports

In July, employees at a clinic in the Chicago suburb of Aurora, Illinois, reported an attempted arson. In August, firefighters found half a burning car at the construction site of a future clinic in New Orleans. On Sept. 4, a clinic in Pullman, Washington, was set ablaze at 3:30 a.m., and on Sept. 30, someone broke a window at a Thousand Oaks, California, clinic and threw a makeshift bomb inside.

The real horror here is not just that a forced-birth fanatic attacked a clinic, but that abortion providers across America are obliged to work as if they might, at any time, be attacked by forced-birth fanatics whose right to own a small arsenal of firearms is protected by Congress. 

The United States is bristling with heavily armed right-wingers who believe the law applies to everyone but them. This is the second act of domestic terrorism in America in a week. On Monday, racists shouting the n-word opened fire at a Black Lives Matter protest in Minneapolis, injuring three. This time, the killer is a white man in his 50s. Most American domestic terrorists are white men, which may explain why they are not treated as political agents, and instead dismissed as “lone wolves” and “madmen”.

Terrorism is violence against civilians in the service of ideology. By anyone’s sights, these killers are terrorists, and by the numbers, these terrorists pose substantially more of a threat to American citizens than foreign terrorism—but nobody is calling for background checks on white men, or for members of the republican party to wear ID tags. In America, like many other western nations, people only get to be “terrorists” when they are “outsiders” who go against the political consensus. And there is a significant political consensus behind this bigotry, including within Washington itself. That consensus plays out every time a Republican candidate or Fox news hatebot expresses sorrow for the victims of murder whilst supporting both the motives and the methods of the murderers. If that sounds extreme, let’s remind ourselves that the same politicians who declare that abortion is murder are also telling their constituents that any attempt to prevent them owning and using firearms is an attack on their human rights. 

Take Planned Parenthood. For months now, systematic attempts in Washington to defund the organisation have swamped the nation with anti-choice, anti-woman rhetoric. Donald Trump, the tangerine-tanned tycoon who has managed to become the frontrunner in the republican presidential race not in spite of his swivel-eyed, stage-managed, tub-thumping bigotry but because of it, recently called Planned Parenthood an “abortion factory” and demanded that it be stripped of all state support. Trump, in fact, held a pro-choice position not long ago, but like many US republicans, he is far smarter than he plays. Trump understands that what works for the American public right now, in an absence of real hope, is fanaticism. 

Donald Trump, like many republican candidates, is happy to play the anti-woman, anti-immigrant, racist fanatic in order to pander to white, fundamentalist Christian voters who just want to hear someone tell it like it is. Who just want to hear someone say that all Muslims should be made to wear ID cards, that Black protesters deserve to be “roughed up”, that water-boarding is acceptable even if it doesn’t work because “they deserve it”. Who just want something to believe in, and when the future is a terrifying blank space, the only voice that makes sense anymore is the ugly, violent whisper in the part of your heart that hates humanity, and goddamn but it’s a relief to hear someone speaking that way in a legitimate political forum. Otherwise you might be crazy.

American domestic terrorists are not “lone wolves”. They are entrepreneurial. They may work alone or in small groups, but they are merely the extreme expression of a political system in meltdown. Republican politicians are careful not to alienate voters who might think these shooters had the right idea when they condemn the violence, which they occasionally forget to do right away. In August, a homeless Hispanic man was allegedly beaten to a pulp by two Bostonians, one of whom told the police that he was inspired by Donald Trump’s call for the deportation of “illegals”. Trump responded to the incident by explaining that “people who are following me are very passionate. They love this country and they want this country to be great again.”

But that’s not even the real problem with Donald Trump. The real problem with Donald Trump is that he makes everyone standing just to the left of him look sane. All but one republican governor has declared that refugees from Syria are unwelcome in their states. Across the nation, red states are voting in laws preventing women from accessing abortion, contraception and reproductive healthcare. Earlier this year, as congressmen discussed defunding Planned Parenthood, 300 ‘pro-life’ protesters demonstrated outside the same Colorado clinic where three people died this weekend. On a daily basis, the women who seek treatment at the clinic are apparently forced to face down cohorts of shouting fanatics just to get in the door. To refuse any connection between these daily threats and the gunman who took the violence to its logical extreme is not merely illogical—it is dangerous.

If terrorism is the murder of civilians in the service of a political ideology, the United States is a nation in the grip of a wave of domestic terrorism. It cannot properly be named as such because its logic draws directly from the political consensus of the popular right. If the killers were not white American men, we would be able to call them what they are—and politicians might be obligated to come up with a response beyond “these things happen.”

These things don’t just “happen”. These things happen with escalating, terrifying frequency, and for a reason. The reason is that America is a nation descending into political chaos, unwilling to confront the violent bigotry at its heart, stoked to frenzy by politicians all too willing to feed the violence if it consolidates their own power. It is a political choice, and it demands a political response.

Laurie Penny is a contributing editor to the New Statesman. She is the author of five books, most recently Unspeakable Things.