William K. Black writes in part:
SchÃ¤uble's claims about austerity repeat two of the great lies that are driving the Ã¼ber-Depression: (1) austerity in response to the Great Recession stimulates economic growth and (2) everyone agrees this is true. The third great lie is that "there is no alternative" to austerity.
Economists have known for at least 75 years that austerity is likely to make economic contractions more severe. The eurozone's infliction of austerity has produced precisely the self-inflicted damage that economists predicted. The European leaders who caused this wholly gratuitous economic disaster, unsurprisingly, will not admit or remedy their errors.
But America has its own variant of this insanity and Lew is one of our most self-destructive austerians.
Investment programs can be very helpful in conjunction with overall stimulus budgets, but they cannot counteract austerity. This has been one of Obama's recurrent blind spots. He seems to believe that if he can implement a new $2 billion infrastructure investment or jobs program that can overcome the damage to the economy caused by austerity in the form of a combined $300 billion in reduced spending and increased tax revenues. The net effect is $288 billion in lost demand due to austerity. This slows growth. If the austerity is large enough it causes growth to turn negative and throws the Nation back into recession or depression. We may know why Obama has this blind spot about the damage he is inflicting through austerity – he gets his advice from Lew. "Nobody in Europe" Sees A "Contradiction" between Austerity and Growth.