More on the dangers inherent in "austerity" - pushing deficit reduction as policy priority when a damaged economy is still deep in the dumps

As if it wasn't apparent to anyone other than hard-core ideologues - and politicians who should know better running scared - the evidence increases that deficit mania in a recession is little more than a recipe for making things even worse.

John Cassidy at The New Yorker, offers his perspective on the evidence from Britain that an agenda of austerity - i.e. spending cuts and fixation on short-term deficit reduction - is  utterly wrong-headed in a deep recession:

With all the talk of a possible double-dip recession in the U.S. economy—here’s my own little contribution—it’s surprising (and somewhat scandalous) that more attention isn’t being paid to what is happening in Britain, where a second economic downturn began last fall and shows few signs of relenting.

About a year ago, with the British economy seemingly recovering fairly well from the financial crisis of 2008, David Cameron’s Conservative-Liberal coalition embarked on a vigorous policy of deficit reduction, raising taxes and cutting government spending in an effort to balance the budget by 2015. How this experiment in pre-Keynesian economic policy turns out obviously has important implications for the fiscal debate on this side of the Atlantic.

So far, the results aren’t looking very favorable.
In the four months from October to January, the U.K.’s G.D.P. actually fell. Since then, it has edged up slightly. According to a new report from the non-partisan National Institute for Economic Research, in London, in the three months to May the economy expanded, but by just 0.4 per cent—a miserly rate of growth. 

... As the chart above shows, the current slump seems set to last at least as long as the downturns of 1930-1934, a.k.a. The Great Depression, and the savage “Thatcher Recession” of 1979 to 1983, during which large swaths of Britain were effectively de-industrialized...

Given this situation, you might think that concerned international bodies, such as the International Monetary Fund, would be urging Cameron and George Osborne, his whey-faced Chancellor, to consider adopting a Plan B. But there you would be wrong. Earlier this week, the I.M.F., after completing its annual inspection of the U.K. economy, issued a statement that looked suspiciously like it had been drafted in Downing Street.

 “Aided by the implementation of a wide-ranging policy, the post-crisis repair of the U.K. economy is under way,” it began. “However, the weakness in economic growth and rise in inflation over the last several months was unexpected.”

Without pausing to answer the question of unexpected by whom—certainly not Lord Skidelsky and other Keynesian economists who warned all along that Osborne’s plan could well derail the British recovery—the I.M.F./Downing Street communiqué went on.

 “This raises the question of whether it is time to adjust macroeconomic policies. The answer is no…. Strong fiscal consolidation is under way and remains essential to achieve a more sustainable budgetary position.”

And so, the great experiment continues, with sixty-two million Britons cast in the role of guinea pigs.

And with budget negotiations in the US Congress focused on spending cuts - and further stimulus totally off the table - it looks like we're next.