Robert Reich - The lesson for Obama of Europe's failed austerity
April 24, 2012 So far, President Obama's election strategy can best be summed up as: "We're on the right track, my economic policies are working, we still have a long way to go, but stick with me and you'll be fine."
This won't be enough to win him the election. The US recovery is too anaemic, and the chance of an economic stall between now and election day far too high. Even now, Mitt Romney's empty "I'll do it better" refrain is attracting as many voters as Obama's "we're on the right track." Each is gathering 46% of voter support, according to the latest New York Times/CBS News poll.
Only 33% of the American public thinks the economy is improving, while 39% say they're still falling behind financially – an 11-point increase from 2008. Nearly two thirds are concerned about paying for housing, and 23% of Americans with mortgages say they're underwater. If the economy stalls, Romney's empty promise will look even better. And I'd put the odds of a stall at 50:50.
Europe's forced austerity is pushing the continent into recession. Spain is already in one, and much of the rest of Europe is on the way. Luckily, the United States hasn't yet fallen into the austerity trap – America's fiscal policy is still wisely expansionary – but it's not sufficient to overcome a pull-back by American consumers.
Because most Americans' real pay continues to drop, they're going deeper into debt and tapping into their savings. Inevitably, they'll have to cut their spending. Without sufficient government spending to make up the difference, total demand will shrink, causing employers to pare hiring. March's disappointing jobs report could mark the beginning.
Read More:
http://www.guardian.co.uk/commentisfree/cifamerica/2012/apr/23/lesson-obama-europe-failed-austerity
