Chart of the Day: Austerity Politics

Let our journalists help you make sense of the noise: Subscribe to the Mother Jones Daily newsletter and get a recap of news that matters.

So what happens if we tighten our belts and cut back on spending, as Republicans unanimously want us to do? A new IMF study estimates the effect of a cutback equal to 1% of GDP, which amounts to about $150 billion in the U.S. According to both the GOP leadership and its crew of presidential candidates, this would be peanuts, a mere down payment on serious budget cutting.

And maybe so. Unfortunately, as the chart below shows, a cutback of that size would lead to lower incomes and dramatically higher unemployment. But wait! There’s more! The IMF study says the effect is twice as big as the one in Chart 2 when central banks can’t cut interest rates. And guess what? The Fed already has interest rates at zero. They can’t cut them any further.

In other words, the GOP’s version of belt-tightening would probably jack up unemployment rates by nearly a full point. Welcome to Rick Perry’s America. (Via Brad Plumer.)

FACT:

Mother Jones was founded as a nonprofit in 1976 because we knew corporations and the wealthy wouldn't fund the type of hard-hitting journalism we set out to do.

Today, reader support makes up about two-thirds of our budget, allows us to dig deep on stories that matter, and lets us keep our reporting free for everyone. If you value what you get from Mother Jones, please join us with a tax-deductible donation today so we can keep on doing the type of journalism 2020 demands.

payment methods

FACT:

Mother Jones was founded as a nonprofit in 1976 because we knew corporations and the wealthy wouldn't fund the type of hard-hitting journalism we set out to do.

Today, reader support makes up about two-thirds of our budget, allows us to dig deep on stories that matter, and lets us keep our reporting free for everyone. If you value what you get from Mother Jones, please join us with a tax-deductible donation today so we can keep on doing the type of journalism 2020 demands.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate