Music to read by:
This is the dawning of the Age of Austerity
The Age of Austerity, Austerity, Austerity
Austerity, Austerity, Austerity
I think that, somewhere over the Atlantic, the definition of "austerity" was lost in translation for "austerity" in Europe does not mean what Americans think it means.
Portugal:
A €2.2
billion stimulus package 2009, 1.25% of GDP, resulted in economic growth that stayed negative and 3 million more unemployed Portuguese workers. The country's finance minister told the New York Times, “it didn’t turn things around, and may have made things worse.”
France:
In France, "austerity" almost entirely meant tax increases:
A 3% surtax on incomes above €500,000.
A 1% increase in the top marginal income tax rate (40% to 41%).
The automatic indexation of tax brackets for inheritance, wealth, and income taxes ended.
Corporate taxes were raised 5% on businesses with revenues of more than €250 million.
There was a hike in the capital gains tax rate. (Currently, capital gains are taxed at the rate of 19%, plus 13.5% social charges. The
social charges will increase to 15.5% on 1 July 2012, giving a total
rate of 34.5%).
Several corporate tax breaks were ended.
The VAT increased from 19.2% to 21.2% and reduced VAT went from 5.5% to 7%.
Excise taxes on tobacco and alcohol were hiked.
There were some reforms to entitlements and welfare programmes, but they haven't yet taken effect. For example, France raised its retirement age from 60 to 62.....but that reform will not take effect until 2017. Also, the cap on government spending on healthcare doesn't take effect until next year.
It is kind of hard to blame cuts that haven't taken effect for France's slowing growth while ignoring tax increases that have.
Britain:
One of the first "austerity" measures taken by the Cameron-led coalition was the imposition of a 50% income tax on the "evil rich." This hike resulted in a £509
million decrease in tax revenues to the Treasury.
The Coalition did trim some government payrolls and cut back on a few government programmes, but government spending still consumes a whopping 49% of GDP.
Most importantly, actual government spending increased by £59.2
billion from 2009 to 2011.
Spain:
Imposed a wealth tax on citizens with €700,000 of assets.
Imposed 7% income tax
on those earning more than €300,000 per year.
Hiked the capital-gains tax rate.
Italy:
Imposed a Solidarity Tax of 3% on all taxpayers earning more than €300,000.
Greece:
Increased taxes nearly twice as much as it cut spending.
5% surtax on the wealthy.
VAT hiked to 23%.
Fuel, alcohol, and tobacco taxes were hiked.
As Michael Tanner of CATO has said, "It should come as no surprise that all those new taxes, combined with a lack
of spending restraint, has threatened to throw Europe back into a
double-dip recession. Is it any wonder that French, Greek, and British
voters were anxious to “throw the bums out”? Wait, this sounds familiar. Tax hikes on the rich accompanied by
vague promises of future spending restraint, while refusing to
restructure entitlement programs. That sounds a lot like . . . Barack
Obama. Maybe the U.S. can learn something from Europe after all."
Too bad that Obama is too stubborn and ignorant to heed the lessons of "austerity" in Europe.
Below is the OECD data, as is clearly apparent, no country is spending below its 2004 level.
| | Billions of US dollars |
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2004
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2005
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2006
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2007
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2008
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2009
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2010
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2011
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Australia
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Austria
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Belgium
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Canada
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Chile
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Czech Republic
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Denmark
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Estonia
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Finland
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France
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Germany
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Greece
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Hungary
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Iceland
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Ireland
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Israel
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Italy
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Japan
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Korea
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Luxembourg
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Mexico
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Netherlands
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New Zealand
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Norway
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Poland
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Portugal
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Slovak Republic
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Slovenia
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Spain
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Sweden
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Switzerland
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Turkey
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United Kingdom
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United States
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Euro area
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OECD-Total
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14 March 2012 |
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| Annual national accounts: Gross domestic product, OECD National Accounts Statistics (database) |
Related Reading:
Aquarius lyrics
Songwriters: Gerome Ragni;James Rado;Galt Mac Dermot
When the moon is in the seventh house
And Jupiter aligns with Mars
Then peace will guide the planets
And love will steer the stars
This is the dawning of the age of Aquarius
The age of Aquarius, Aquarius, Aquarius
Harmony and understanding
Sympathy and trust abounding
No more falsehoods or derisions
Golden living dreams of visions
Mystic crystal revelation
And the minds true liberation
Aquarius, Aquarius
When the moon is in the seventh house
And Jupiter aligns with Mars
Then peace will guide the planets
And love will steer the stars
This is the dawning of the age of Aquarius
The age of Aquarius, Aquarius, Aquarius
Aquarius, Aquarius, Aquarius
