Are you ready for austerity?

"Here are details of some austerity measures around the euro zone.

* GREECE:

-- In 2010, the government cut public sector wages by about 15 percent, increased the retirement age, froze pensions and cut public spending. But it has failed to boost tax collection as much as targeted, despite a hefty VAT increase.

-- Partly as a result of the measures, the economy is forecast to shrink 3 percent in 2011 after a 4.2 percent drop in 2010, with unemployment swelling to a record 14.6 percent from an estimated 12.1 percent this year.

-- Some measures listed in the final draft plan from November 18 included: Increase in the lower VAT rates to 13 percent from 11 percent and to 6.5 percent from 5.5 percent, along with a levy on large profitable firms. Cuts in government operating costs and a nominal pension freeze. Significant cuts in operational and wage costs of loss-making public utilities, in health costs, defense spending. The health ministry has said it plans extra spending cuts worth 840 million euros ($1.10 billion) in 2011. -- Greece is aiming for a budget deficit of 7.4 percent of GDP in 2011, down from about 9.4 percent in 2010.

* IRELAND:

-- Ireland's finance minister unveiled a record austerity budget on December 7, inflicting more pain on voters in a bid to impress the IMF and EU and ensure quick access to their rescue funds.

-- Finance Minister Brian Lenihan will squeeze 6 billion euros out of the economy in 2011 by cutting spending by 4 billion euros and making up the other 2 billion euros in tax adjustments. -- Ireland's recession-weary population has already endured two and a half years of cuts and the prospect of four more years of sacrifice, launched with the toughest budget on record, has many people wondering how they will cope.

-- Ireland set out last month its four-year plan to make 15 billion euros in savings to bring down its record deficit, a condition for the country to receive 85 billion euros in loans from the IMF and European Union. The EU approved the rescue on November 28.

-- The four-year plan is made up of 10 billion euros in spending reductions and 5 billion euros in tax and revenue-raising measures.

-- The budget deficit is set to blow out to 32 percent of GDP in 2010 due to the one-off inclusion of a mammoth bill for bailing out Ireland's banks. Excluding the bank bill, the deficit will be 11.7 percent of GDP in 2010 as against a target of 11.6 percent. The deficit is to be reduced to 9.1 percent of GDP in 2011, 7.0 percent in 2012, 5.5 percent in 2013 and 2.8 percent by 2014.

* FRANCE:

-- France's Constitutional Council approved President Nicolas Sarkozy's pension bill on November 9, clearing the last hurdle to a reform that will raise the retirement age by two years to stem a huge pension deficit.

-- The law will boost the retirement age to 62 from 60 by 2018, making people work longer for a full pension, and will raise public sector contributions to private sector levels. The reform will also hike the eligible age to receive a full pension to 67 from 65.

-- The budget aims to cut the public deficit to 6 percent of gross domestic product in 2011 from an estimated 7.7 percent in 2010, in the first phase of a plan to trim the shortfall to the EU's 3 percent ceiling in 2013, and 2 percent in 2014.

The budget envisages:

-- Increasing the top marginal rate of tax to 41 percent from 40 percent to fund pension reforms.

-- Raising the tax on capital gains by one percentage point.

-- The end of a one-off corporate tax break in 2010 will increase revenues by 5.3 billion euros.

-- The end of fiscal stimulus measures will cut 8.2 billion euros from the deficit.

* PORTUGAL:

-- Portugal approved an austerity budget on November 26, vowing to spur growth and apply tough spending cuts.

-- Portugal has promised to cut 2010's budget deficit to 7.3 percent of gross domestic product from 9.3 percent last year and further reduce it to 4.6 percent in 2011.

Here are some of the measures:

-- Cuts of 5 percent in civil servant wages and increases in taxes in an effort to save 5.1 billion euros next year.

-- On the revenue side, the measures would add 1.7 billion euros to state coffers, or one percentage point of gross domestic product. They include:

-- Value-added tax to be raised by 2 percentage points for top level to 23 percent from 21 percent, expanding on a 1 percentage point increase on all levels implemented in July.

* SPAIN:

-- Spain's parliament formally approved the government budget for 2011 on December 21. It is designed to cut the deficit by more than three percentage points and convince debt markets its public finances are sustainable.

-- Measures included public spending, excluding autonomous regions, to be cut by 7.9 percent to 122 billion euros in 2011.

-- The income tax rate on those earning more than 120,000 euros rises to 22.5 percent from 21.5 percent. Government hopes to raise 170-200 million euros from tax hike on high earners.

-- Forecasts additional 1.2 billion euros in savings from regional and local governments.

* ITALY:

-- The Italian Senate on December 7 gave final parliamentary approval to the government's 2011 budget plan, considered vital to consolidating public accounts and buffering Italy from the euro zone's debt crisis.

-- The budget, containing belt-tightening measures worth some 25 billion euros over three years, aims to cut the fiscal deficit to 2.7 percent of gross domestic product in 2012 from 5.3 percent in 2009. The deficit is targeted to fall to 3.9 percent in 2011 from a targeted 5.0 percent in 2010.

Measures include:

-- Delaying retirement dates by three to six months, a state salary freeze and pay cuts for high public sector earners.

-- Regional and local governments will be pressed to contribute some 13 billion euros of spending cuts in 2011-12.

-- There will be a 10 percent cut per year in 2011 and 2012 in spending by all government ministries.

* GERMANY:

-- Chancellor Angela Merkel said her government aims to save around 80 billion euros between 2011 and 2014 and get the

budget deficit below European Union limits by 2013. The cabinet backed a bill covering the bulk of the 80 billion euro program over the next four years on September 1.

-- Germany's Bundestag (lower house of parliament) agreed on November 26 a 2011 federal budget plan that puts Berlin on track to hit deficit reduction targets after a faster-than-expected recovery. The budget set federal spending at 319.5 billion euros, 4.3 percent less than 2010, and net new borrowing at 48.4 billion euros, lower than originally forecast."

http://www.reuters.com/article/idUSTRE6BL51620101222?pageNumber=1
 
The US has to cut its vast military budget, how can anyone justify spending which is more than the next fifteen countries in the worldwide league table of military budgets?
 
In the UK, where I see you live, the cuts have already begun.

"...the British government revealed a four year spending cut plan, the most “ambitious” so far in Europe, that will affect all sectors of the British economy, especially the public sector. According to the British Treasury, the deep cuts are “an urgent priority to secure economic stability at a time of continuing uncertainty in the global economy and put Britain’s public services and welfare system on a sustainable long term footing.”

The plan says that the current government has inherited “one of the most challenging fiscal position in the world”. In effect, Britain’s deficit has reached the largest level in the country’s peacetime history. Britain currently borrows one pound for every four it spends. The UK currently spends 43 billion pounds on debt interests alone. David Cameron’s conservative government argues that “failure to take action now would put the recovery at risk, and place an unfair burden on future generation”.

“The Spending Review makes choices. Particular focus has been given to reducing welfare costs and wasteful spending. This has enable the coalition government to prioritize the NHS, schools, early years provision and the capital investments that support long term economic growth, setting the country on a new path towards long term prosperity and fairness. As a result of these choices, departmental budgets other than health and overseas aid will be cut by an average of 19 percent over four years,” says the summary of the Spending Review prepared by the British Treasury.

The key point of the drastic cuts announced today will be as followed: Around 500,000 public sector jobs likely to be lost; an average 19 percent four-year cut in departmental budgets; 7 billion pounds cuts from additional welfare budget; police funding cut by 4 percent a year; retirement age to rise from 65 to 66 by 2020. The overall goal is to eliminate the structural budget deficit by 2015.

However, even if the British streets were sedated today, the plan got a raucous reception from the opposition Labour party in the House of Commons. The Labour opposition called the plan “reckless”.

“The Spending Review is a reckless gamble with people’s livelihoods which risked stifling the fragile recovery,” said Alan Johnson from the Labour party. Other critics of the plan are coming from the British media. “The cuts to the welfare benefit are regressive, in the most basic sense of costing families in the lower half of income distribution,” said Stephanie Flanders from the BBC.

Effectively, the middle class and the poor in Britain will pay the price for the cuts, and will be left holding the bag for the follies of global capitalism. The new welfare savings come from gutting unemployment programs by abolishing employment and support allowance which replaces incapacity benefit after one year. Two billion pounds will be saved this way on the back of the unemployed."

http://newsjunkiepost.com/2010/10/2...sivity-in-the-uk-strikes-and-riots-in-france/

I wonder how Americans, who are unused to austerity and sacrifice, will react to some of the measures being mooted by the Tea Party zealots?
 
Mojo said:
In the UK, where I see you live, the cuts have already begun.

"...the British government revealed a four year spending cut plan, the most “ambitious” so far in Europe, that will affect all sectors of the British economy, especially the public sector. According to the British Treasury, the deep cuts are “an urgent priority to secure economic stability at a time of continuing uncertainty in the global economy and put Britain’s public services and welfare system on a sustainable long term footing.”

The plan says that the current government has inherited “one of the most challenging fiscal position in the world”. In effect, Britain’s deficit has reached the largest level in the country’s peacetime history. Britain currently borrows one pound for every four it spends. The UK currently spends 43 billion pounds on debt interests alone. David Cameron’s conservative government argues that “failure to take action now would put the recovery at risk, and place an unfair burden on future generation”.

“The Spending Review makes choices. Particular focus has been given to reducing welfare costs and wasteful spending. This has enable the coalition government to prioritize the NHS, schools, early years provision and the capital investments that support long term economic growth, setting the country on a new path towards long term prosperity and fairness. As a result of these choices, departmental budgets other than health and overseas aid will be cut by an average of 19 percent over four years,” says the summary of the Spending Review prepared by the British Treasury.

The key point of the drastic cuts announced today will be as followed: Around 500,000 public sector jobs likely to be lost; an average 19 percent four-year cut in departmental budgets; 7 billion pounds cuts from additional welfare budget; police funding cut by 4 percent a year; retirement age to rise from 65 to 66 by 2020. The overall goal is to eliminate the structural budget deficit by 2015.

However, even if the British streets were sedated today, the plan got a raucous reception from the opposition Labour party in the House of Commons. The Labour opposition called the plan “reckless”.

“The Spending Review is a reckless gamble with people’s livelihoods which risked stifling the fragile recovery,” said Alan Johnson from the Labour party. Other critics of the plan are coming from the British media. “The cuts to the welfare benefit are regressive, in the most basic sense of costing families in the lower half of income distribution,” said Stephanie Flanders from the BBC.

Effectively, the middle class and the poor in Britain will pay the price for the cuts, and will be left holding the bag for the follies of global capitalism. The new welfare savings come from gutting unemployment programs by abolishing employment and support allowance which replaces incapacity benefit after one year. Two billion pounds will be saved this way on the back of the unemployed."

http://newsjunkiepost.com/2010/10/2...sivity-in-the-uk-strikes-and-riots-in-france/

I wonder how Americans, who are unused to austerity and sacrifice, will react to some of the measures being mooted by the Tea Party zealots?
Click to expand...

We have been in denial for some time, but now there is a massive dose of reality. The US is about two years behind.
 
tom prendergast said:
We have been in denial for some time, but now there is a massive dose of reality. The US is about two years behind.
Click to expand...

Do you think the electorate in the United States will accept the harvest they planted when they elected the "cut spending" crowd?

Look at some of these proposals:

http://www.downsizinggovernment.org/

I wonder if the voters resolve to balance the budget will survive the cutting of benefits and services that the "smaller government" crowd is planning.

Especially when they lose their jobs because the company they work for lost their government contract....or because the business they own loses customers because so many will be laid off.
 
Mojo said:
Do you think the electorate in the United States will accept the harvest they planted when they elected the "cut spending" crowd?

Look at some of these proposals:

http://www.downsizinggovernment.org/

I wonder if the voters resolve to balance the budget will survive the cutting of benefits and services that the "smaller government" crowd is planning.

Especially when they lose their jobs because the company they work for lost their government contract....or because the business they own loses customers because so many will be laid off.
Click to expand...

You don't have a choice, you also need to put a few Wall Street bankers up against a wall. I remind you of the famous quote from Voltaire's Candide.

"Dans ce pays-ci, il est bon de tuer de temps en temps un amiral pour encourager les autres"
 
tom prendergast said:
You don't have a choice, you also need to put a few Wall Street bankers up against a wall. I remind you of the famous quote from Voltaire's Candide.

"Dans ce pays-ci, il est bon de tuer de temps en temps un amiral pour encourager les autres"
Click to expand...

We have no Admiral Byng to shoot.

Governor Cuomo of New York is going after Ernst & Young, but accountability is not something I expect, and it's too late for blame.
 
Mojo said:
When the new House majority is seated, you can expect a lot less, if the Tea Party candidates' rhetoric can be believed.

What government programs and services are you willing to do without?

Of course, cuts may not be enough to tackle the deficit.

Are you willing to pay more fees?

Are you ready to pay higher taxes?

Are you ready to wait longer for benefits, have them reduced, or maybe even forgo them altogether? Think scholarship programs/student aid, Social Security, VA benefits, Medicare.

In some countries where austerity measures are already being defined, there have been mass protests, strikes, and even riots after the electorate realized they'd put people in power who would actually cut government spending.

When spending is cut, programs and services will have to be curtailed or eliminated, pensions and other benefits reduced, payments postponed or even eliminated, etc.

Many schools, public and private will feeel the pinch as grant funding vanishes.

Layoffs are possible as government agencies are forced to eliminate programs.

Reduced spending means fewer dollars for businesses that provide goods and services to the government.

Are you ready to lose your job (and maybe do without unemployment benefits) to balance the budget?

What are you prepared to sacrifice?
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Cutting doesn't have to sharply affect the poor.

Pensions: Use a claw-back system. Those whose income passes a certain level start to pay back some of the pension money they receive.

Medical: If a universal plan was in place the US would realize the decrease in costs like most other countries experience. Even with cutbacks medical care is available to all people in those countries.

Yes, increase the tax on the wealthy. There is a big difference between cutting back from a $40,000 car to a $20,000 car than there is cutting from a $20,000 car to no car.

The US has the technology to feed and house all it's citizens. It also has the technology to treat all it's ill citizens so cutting back or measures of austerity should not include hunger or homelessness or lack of medical care.

There is a difference between downsizing from a large home to a small one as opposed from a small home to a cardboard box!

Of course, we're going to see violent demonstrations if people are put in desperate situations because there is no need for it.
 
apple0154 said:
Cutting doesn't have to sharply affect the poor.

Pensions: Use a claw-back system. Those whose income passes a certain level start to pay back some of the pension money they receive.

Medical: If a universal plan was in place the US would realize the decrease in costs like most other countries experience. Even with cutbacks medical care is available to all people in those countries.

Yes, increase the tax on the wealthy. There is a big difference between cutting back from a $40,000 car to a $20,000 car than there is cutting from a $20,000 car to no car.

The US has the technology to feed and house all it's citizens. It also has the technology to treat all it's ill citizens so cutting back or measures of austerity should not include hunger or homelessness or lack of medical care.

There is a difference between downsizing from a large home to a small one as opposed from a small home to a cardboard box!

Of course, we're going to see violent demonstrations if people are put in desperate situations because there is no need for it.
Click to expand...

I don't see a "claw-back" system working, even if it were put on the table. The elderly tend to vote en bloc, and they have historically resisted any cuts in pension benefits, as in Social Security. It's doubtful you can count on this happening. Social Security cuts are known as the "third rail" of US politics for a reason.

Unfortunately, the "small government" advocates are going to defund the health care initiative we've got - the one that hasn't even started yet, because they think it's "socialism". You can forget universal health care.

After examining the posts from conservatives on this board, do you honestly think they are willing to accept any tax increase at all? I'm also uncertain who would be deemed "wealthy", but usually anyone who is denies it strenuously, in my experience.

Yes, we have the technology to feed, clothe, house, educate and provide medical care to all our citizens. If we didn't do these things during propserous times, what makes you think we'll do them in lean times?

What do you say?
 
Mojo said:
Exactly. How can we debate if you don't understand how to present your argument without fallaciousness?
Click to expand...

There's no fallaciousness. Protectionism would mend our economy, making austerity unnecessary.

Please identify the fallaciousness you perceive.
 
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