Pro-austerity Spain is now being hit with higher debt, and larger recession.
In other words, the criticism of austerity that a lot of people have been making for year has, yet again, been accurate. Spain’s austerity is making a bad problem worse.
Remember that Spain used to have a budget surplus before the economic crisis, so government spending was never the central problem. But for conservatives, the answer everywhere has been to chop government spending, and somehow that will cure every problem, real or imagined.
While the theory was always questioned by those on the left, conservatives kept saying that the master plan needed more time – just give the cuts a little longer to perform their voodoo magic. Still, even conservatives couldn’t miss the devastating damage austerity has been causing to the failing economy in the UK, and American right wingers even started to abandon the word “austerity,” though not its actual policies.
Republicans would try to spin their version of austerity as somehow “different” than what was tried in Europe. People like Paul Ryan would still push the same failed concepts as European and UK right wingers did before him, but by calling it something else, somehow Ryan and his ilk would magically avoid the painful consequences.
But back to Spain, where things just keep getting worse. The unemployment rate is 26%, and few expect it to improve any time soon. For the youth of Spain, it’s truly becoming a lost generation, with an unemployment rate of 56.5%. (It’s no wonder Paul Ryan doesn’t want to use the word “austerity” these days.)
The right wing government in Spain made the normal promises about how austerity would solve the problem, but like the UK, it’s only making things worse. Cutting government spending is gutting the Spanish economy, and now making borrowing costs even higher because there is no growth. The direct correlation between cuts in government spending and cuts in economic growth are clear.
The problem of austerity is especially important now that President Obama has lost his advantage over the GOP in the polls on the economy. While Obama has never been a strong advocate of using a strong stimulus, he at least had a stimulus.
The irony is that, despite the typical GOP talk about the Obama bringing “European” and foreign ideas to America, it’s the Republicans that keep embracing failed European ideas.
What is abundantly clear from the European example is that austerity does not solve any problems. It just worsens the existing problems, and makes the 99% suffer. Spain, sadly, proves it yet again.