For those who still think the US escaped austerity these past few years, perhaps this will finally clear it up:
Before Obama had even lifted a finger, the CBO was already projecting that the federal deficit would rise to $1.2 trillion in fiscal 2009. The government actually spent less money in 2009 than it was projected to, but the deficit expanded to $1.4 trillion because revenue from taxes fell much further than expected, due to the weak economy and the emergency tax cuts that were part of the stimulus bill.
The projected deficit for the 2010-13 period has grown from an expected $1.7 trillion in January 2009 to $4.4 trillion today. Lower-than-forecast revenue accounts for 73% of the $2.7 trillion increase in the expected deficit. That’s assuming that the Bush and Obama tax cuts are repealed completely.
When Obama took the oath of office, the $789 billion bank bailout had already been approved. Federal spending on unemployment benefits, food stamps and Medicare was already surging to meet the dire unemployment crisis that was well under way. See the CBO’s January 2009 budget outlook.
Obama is not responsible for that increase, though he is responsible (along with the Congress) for about $140 billion in extra spending in the 2009 fiscal year from the stimulus bill, from the expansion of the children’s’ health-care program and from other appropriations bills passed in the spring of 2009.
If we attribute that $140 billion in stimulus to Obama and not to Bush, we find that spending under Obama grew by about $200 billion over four years, amounting to a 1.4% annualized increase.
After adjusting for inflation, spending under Obama is falling at a 1.4% annual pace — the first decline in real spending since the early 1970s, when Richard Nixon was retreating from the quagmire in Vietnam.
In per-capita terms, real spending will drop by nearly 5% from $11,450 per person in 2009 to $10,900 in 2013 (measured in 2009 dollars).
And that's just the Federal government. States are even worse.
Now the Democrats seem to think this is a good thing, something to be proud of. And the Republicans are just lying through their teeth insisting that the administration has been throwing dollars around like drunken sailors. But the truth is that for a number of political and ideological reasons, the United States has been practicing austerity.
And it's having the same effect that Keynesian economists predicted. By trying to cut the deficit in a recession, you end up making it worse. As Krugman memorably put it:
"Austerity-loving pundits and policy makers really are like medieval doctors who believed in treating illness by bleeding their patients, making the patients even sicker, leading to more bleeding".h/t to groobiecat