recovery

Where’s the Austerity?

by Ryan Young on October 14, 2011

in Economy, International, Politics as Usual

Here’s a letter I recently sent to The Economist:

SIR – you write that the “collective obsession with short-term austerity across the rich world is hurting” the prospects for global economic recovery; be afraid.

May the data allay your fears. From 2000 to 2010, the UK’s government spending boomed from 36.6 percent of GDP to 51.0 percent. France’s spending went from 51.6 percent to 56.2 percent. Even sober Germany grew its government from 45.1 percent of GDP to 46.7 percent.

When Bill Clinton left office, total U.S. government spending was 33.9 percent of GDP. It has blossomed to 42.3 percent under Presidents Bush and Obama.

If the rich world is indeed austerity-obsessed, it is no more than talk. That’s why this writer is afraid.

RYAN YOUNG
Fellow in Regulatory Studies
Competitive Enterprise Institute
Washington

*All data from OECD, downloadable at http://dx.doi.org/10.1787/888932443396

My colleague Greg Conko pointed out that the letter might be more persuasive if it used data from 2008-2010, to isolate government growth since the Great Recession’s start.

It’s a good point, so I looked it up. And the song remains the same. France’s government grew from 52.9 to 56.2 percent; Germany’s grew from 43.8 to 46.7 percent; the UK’s grew from 47.4 to 51.0 percent; and the U.S. grew from 39.0 to 42.3 percent. All that in three short years.

FDIC Prepares for “an even-larger number of bank failures” in 2010

by Daniel Compton on December 17, 2009 · 1 comment

in Bailout Watch, Deregulate to Stimulate, Economy, Employment, Politics as Usual, Stimulus to Nowhere, Zeitgeist

In a display of supreme confidence in the strength of the American economy, the Federal Deposit Insurance Corporation announced a 2010 budget increase of close to 54% earlier this week.  The FDIC’s annual operating budget grew from $2.6 billion in 2009 to $4 billion for 2010.  The largest portion of the increase is devoted to funding takeovers of failed banks.  The 2009 budget allotted $1.3 billion for this purpose, while the new budget devotes $2.5 billion—nearly twice the amount.  Also in the budget is an increased allocation for staffing.  The FDIC intends to bring on over 1,600 new employees, most of whom are to be hired on a temporary basis, increasing their total staff by about 24% to 8,653.

And what is the impetus for this greatly increased budget?  The press release accompanying the new budget makes it clear that the increase is intended to “ensure that [they] are prepared to handle an even-larger number of bank failures” in 2010.  A total of 133 banks have failed so far in 2009, up from just 28 the previous year.

Clearly, the FDIC must not have gotten word that the recovery has begun.