"History is replete with examples of moments in time when we talk about deficit reduction and try to advance on it around the world, that is, where it leads to job losses, not job creation"
About this Quote
Tavis Smiley draws a sharp line between the political appeal of deficit reduction and its real-world consequences for workers. Efforts to balance budgets through spending cuts and higher taxes, especially during weak recoveries, drain demand from the economy. When governments pull back, public sector jobs disappear, contractors lose work, and households tighten belts, which cascades into the private sector. The result is often a shrinkage of employment rather than the promised expansion.
History offers more than one cautionary tale. The British austerity program after 2010 slowed growth and stifled wage gains for years. The eurozone crisis brought punishing cuts to Greece, Spain, and Portugal, driving unemployment to generational highs. The United States flirted with similar dynamics in 2013 when the sequester trimmed growth and employment just as the recovery sought traction. Economists have seen this before: Roosevelt’s premature fiscal tightening in 1937 triggered a sharp downturn. These episodes support the view that fiscal multipliers can be large in slack economies, so cutting spending subtracts more from total output than advocates expect.
Smiley’s larger project is moral as well as macroeconomic. Debates framed around the deficit often overshadow questions about who bears the cost of consolidation. Layoffs and service cuts hit low-income communities hardest, widening inequality and fraying social supports that make work possible. Budgets, he has argued elsewhere, are moral documents: they reveal whose security is prioritized.
None of this denies that long-run fiscal sustainability matters. It is a claim about timing, priorities, and purpose. When unemployment is high and capacity underused, public investment in infrastructure, education, and care work sustains incomes and builds future productivity. Once robust growth returns, gradual consolidation becomes less painful and more credible. Smiley’s warning urges policymakers to weigh jobs first, resisting the allure of austerity that too often sacrifices people in the name of balance sheets.
History offers more than one cautionary tale. The British austerity program after 2010 slowed growth and stifled wage gains for years. The eurozone crisis brought punishing cuts to Greece, Spain, and Portugal, driving unemployment to generational highs. The United States flirted with similar dynamics in 2013 when the sequester trimmed growth and employment just as the recovery sought traction. Economists have seen this before: Roosevelt’s premature fiscal tightening in 1937 triggered a sharp downturn. These episodes support the view that fiscal multipliers can be large in slack economies, so cutting spending subtracts more from total output than advocates expect.
Smiley’s larger project is moral as well as macroeconomic. Debates framed around the deficit often overshadow questions about who bears the cost of consolidation. Layoffs and service cuts hit low-income communities hardest, widening inequality and fraying social supports that make work possible. Budgets, he has argued elsewhere, are moral documents: they reveal whose security is prioritized.
None of this denies that long-run fiscal sustainability matters. It is a claim about timing, priorities, and purpose. When unemployment is high and capacity underused, public investment in infrastructure, education, and care work sustains incomes and builds future productivity. Once robust growth returns, gradual consolidation becomes less painful and more credible. Smiley’s warning urges policymakers to weigh jobs first, resisting the allure of austerity that too often sacrifices people in the name of balance sheets.
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| Topic | Work |
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