The Age of Austerity
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The Age of Austerity

The Global Financial Crisis and the Return to Economic Growth

Thomas J. Schoenbaum

The book begins with a detailed breakdown of the financial crisis and the government response in the United States, with particular focus on the Dodd-Frank Wall Street Reform and Consumer Protection Act. The author then puts forth a basic three-part plan calling for (1) fundamental tax and entitlement reform; (2) massive economic stimulus in the form of public and private investment to modernize the country’s aging infrastructures; and (3) mortgage relief to revitalize the nation’s housing markets. The book concludes with specific policy proposals designed to achieve these goals and return the US economy to a state of full employment and robust economic growth.
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Chapter 7: Assaulting austerity

Thomas J. Schoenbaum


“L’Amérique a perdu de sa superbe”—America has lost some of its magnificence—said noted author Francis Fukuyama to an interviewer from Le Monde magazine in September 2011. As 2011 came to a close, the US economic growth rate was an anemic 1.8 percent (barely keeping pace with population growth) and is predicted to be about the same in 2012. On 1 March 2012, Fed Chairman Ben Bernanke warned that weak economic growth and high unemployment will be the “new normal” for years to come in the United States. As 2012 begins the US unemployment rate stands at 8.3 percent, but counting the people working part-time looking for full-time work, it is 19.6 percent, almost one in five Americans of working age. Unemployment is particularly grim for young people: one in three were unemployed in 2010. The US Census Bureau reported in September 2011 that 46.2 million Americans are living below the poverty level (US$22 314 for a family of four), the highest in over 50 years, and almost 40 million Americans now receive food stamps, a record high. Incomes of Americans took a beating during the financial crisis: between 2007 and 2011, median household income fell 9.8 percent, to US$49 949, resulting in what Census Bureau officials say is “a significant reduction in the American standard of living.”

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