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Intellectual foundation of Republican push for austerity falls apart

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Economic policy wonks are buzzing today over revelations that a celebrated study conducted by a couple of Harvard University academics was fundamentally flawed.

Steve Benen has the story HERE:

Carmen Reinhart and Kenneth Rogoff published a report a few years ago that was music to the ears of Republicans: when a nation’s debt climbs above 90% of the nation’s total economy, it necessarily serves as a drag on economic growth. The Reinhardt/Rogoff study became the intellectual foundation for austerity and a deliberate shift from job creation to debt reduction.

The problem, we now know, is that Reinhart and Rogoff made some important errors in their research, including a careless mistake in an Excel spreadsheet. The economic research embraced by conservatives everywhere was faulty…

And while Reinhart and Rogoff have quite a bit of work to do, it’s important to realize that this story is about far more than a flawed study. I care that the Reinhardt/Rogoff report was mistaken, but I really care that the report was used to justify widespread and deliberate economic harm.

The Very Serious People took it on faith that once the debt-to-GDP ratio topped 90%, a nation has no choice but to pursue austerity measures…

I know better than to hope for accountability, but given the significance Republicans, news organizations, and the DC establishment placed on the flawed Reinhardt/Rogoff findings, can we begin the discussion anew about focusing on economic growth and job creation? Can every Republican who based their talking points on this study be asked whether they’re prepared to reevaluate their misguided assumptions about slashing investments and hurting the economy on purpose?

There’s more on this matter HERE and HERE and HERE.

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9 Comments

  1. Neftali

    Cool. Now we can let the debt-to-GDP ratio climb to well over 100%. Perhaps we can go over the 121.7% record set in 1946. Even more fun is that we currently spend over $220 Billion just on interest each year on our national debt. By 2020, it will be over $1 trillion a year just spent on interest.

    But hey, none of that matters anymore, right liberals?

  2. Give it up, Neftali. History is not on the side of the austerity demagogues.

  3. Brian Opsahl

    No Pat, he’s right, all the spending that ever happened is all the Democrats fault….has to be right….2000 to 2008 never happened,it’s all Mr.Obama’s spending that got us in this mess in the first place. Everybody knows that when the economy collapsed even though the President wasn’t elected yet ….it’s his fault…!!

    Wow Nef..try again

  4. It’s not anybodys “fault”. It is however all of our debt, as well as our children’s debt and their children’s debt.

    Neftali is right, what is the limit my liberal friends?

  5. Brian Opsahl

    Ask yourself who has done more to fix the problem and who did more to creat the problem.

    Starting with Ron Reagan in 1980 his first year in office the total deficit was 1 trillion dollars,from there you can follow it through right up till today….If you want to know who the big spenders were the numbers are in black and white. Republican Presidents Reagan,Bush 1,and Bush 2, put more of our money on the credit card than all others combined.

    The Democrats got lucky with Clinton and his huge growth in jobs and deficit reductions.
    but it’s all there for anybody to see.

  6. Neftali

    Brian Opsahl – History is irrelevant here, what matters is the future.

    The simple fact is that the current Republican plan reduces the deficit and the President’s latest plan does not.

  7. Brian Opsahl

    History teaches you about how to handle the future,as Republicans said over and over during those dark years of Bush…deficits dont matter (Dick Chenney 2001)
    well they do matter and as i just showed you as your trying to blame the current President that all the money they spent on the visa is now handed over to Mr.Obama and all that interest is now his problem…well BS Nef, the guys on the hook for all that spending is now the party bitching about the most…were was all this (we need to fix the deficit problem when your guy was running things) Paul Ryan voted for anything Bush put forth…did he NOT…!!

    But now he is the biggest complainer of all of them….HYPOCRITS all of them.

  8. Neftali

    Brian – Let us know when the Democrats have a plan to reduce the national debt. Until such time, I’m backing the party that has a plan to do that, the Republicans.

  9. Brian Opsahl

    The plan the President put forth …or the one Paul Ryan put out…yea Ryan lost the election trying to sell us that plan…a plan that didn’t really do anything towards the deficit until the year 2035 or something like that..? But hey it sure cut the hell out of those rich guys taxes ….that plan..?

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