In his State of the Union address, President Barack Obama should unequivocally state he will not adopt the economic austerity policies congressional Republicans have been advocating for the past few years. In addition, he should demonstrate his full commitment to embracing Keynesian economic programs during his second term, at least until the economy has recovered from the 2008 recession.
During an economic recession, there is at least one truism: austerity programs don’t work. As John Maynard Keynes once wrote, “The boom, not the slump, is the right time for austerity.” Although the American economy is no longer in a free fall, no rational person could assert the U.S. economy is booming. At least our economy is still expanding but it is obvious it is growing very slowly.
Great Britain has endorsed economic austerity programs since Prime Minister David Cameron took office in 2010. As Cameron said in a 2012 speech, “Our deficit reduction plan is not an alternative to a growth plan: it’s the very foundation of our growth plan.” Given that Britain’s gross domestic product grew at an average rate of 0.9 percent per year between 2010 and 2012 – the same time period of Britain’s austerity program – I don’t think Cameron understands what austerity programs do to economic growth.
Obama, in contrast, has not embraced austerity programs here in the U.S. In doing so, he has angered congressional Republicans who are more concerned with entitlement reform than making sure our economy continues to grow. This might explain why America’s GDP grew at an average rate of 2.1 percent annually between 2010 and 2012, compared to Britain’s growth rate of 0.9 percent.
It is true our economy is still sluggish. Yet it is equally true austerity programs hurt a fragile economy – especially an economy recovering from the worst economic meltdown since the Great Depression. Obama must clearly state his intentions to implement more Keynesian economic stimulus programs in his second term to guarantee continued economic growth and job creation here in the U.S. He must reject the misguided austerity policies congressional Republicans advocate which will weaken our economic recovery efforts.
Aaron Loudenslager (email@example.com) is a first-year law student.