The new austerity agenda: What lawmakers failed to learn from the Great Depression

As we reflect on the 50 years since President Johnson waged a “War on Poverty,” it is important to also examine our public policy response to the more recent economic downturn that pushed many more Americans into poverty. The historic job loss of the Great Recession created a hardship deeper and more widespread than any previous modern recession, and recalled for many the Great Depression.

Yet policymakers’ response to growing poverty and countless struggling families across the U.S. was largely opposite that of the lessons learned from previous downturns.  Instead of pursuing robust stimulus spending to support struggling families or supporting job creation directly, policymakers opted for austerity.

Austerity is largely a term used to refer to European responses to the Great Recession but the American response took much the same tact. Policymakers dismantled investments in tools that have proven they can ameliorate families’ struggles for their most basic needs and maintain economic activity while the private sector recovers.  Austerity came to the United States in the form of lower-than-needed stimulus spending and spending cuts. Most recently, sequestration reduced government spending dramatically at a time when demand for services is high and the private sector has only reluctantly created jobs.

If lawmakers hadn’t chosen austerity, the U.S. could have added more than 8 million jobs since 2010 by investing in infrastructure, education, scientific research, and job training. Such investments would have bolstered the economy and helped nurture a growing middle class.

Instead, the growing divide between wealthy corporations and middle- and low-income families further show how little our lawmakers have learned from history. During the Great Depression, policymakers recognized that part of the economic challenge facing the country was growing inequality and a segment of the population and society—wealthy taxpayers and profitable corporations—that was wholly uninvested in the plight of their neighbors.

The corporate income tax was born in 1935 largely as a tool to ensure that business was contributing to the public infrastructure that supported their workers and operations, as well as provided some protection against another depression.  Yet here we are again, this time with an austerity agenda that fails to recognize the ways in which corporations avoid paying taxes and, worse yet, includes genuine proposals for reducing corporate income taxes.

Closing corporate tax loopholes would provide much-needed revenue to support our state’s economic recovery with no effect on the job creation potential of corporations. The Stop Tax Haven Abuse Act would be instrumental in replacing budget sequester cuts. The bill would raise at least $220 billion over the next decade by closing corporate tax loopholes that enable multinationals to shield their offshore profits from taxation. It also takes away an incentive to export jobs overseas, and levels the playing field between large, multinational corporations and American small businesses that pay their fair share in taxes.

Instead of making cuts and falling back on antiquated means of austerity, it’s time for our lawmakers to advance policies such as the Stop Haven Abuse Act that will help close corporate loopholes as well as ensure equity to all taxpayers, save American jobs, and allow us to invest in a growing economy.


  1. Frances Jenkins

    January 23, 2014 at 6:14 pm

    More people have entered into poverty since 2008 than ever. I hope Barber will be protesting the policies of Obama in 15 days that have resulted in the highest unemployment rate among African Americas, highest rate of unemployment among the youth and more people added to the poverty rolls. Shame, Shame for Obama!!!!!!

  2. Alan Crighton

    January 23, 2014 at 9:15 pm


    Your comments get wackier every timeI see you posts. Perhaps you should take a look at the significant income redistribution that has taken place in this country leaving more and more in poverty, thanks to regressive GOP policies over the years. It has nothing to do with Obama. Since when has the GOP cared about the unemployed and those in poverty (especially minorities)??? Shame, Shame on Frances and the rest of the Civitas hypocrites!!!!

  3. Jack

    January 24, 2014 at 4:47 pm

    The target of the austerity agenda are minorities and those without a political voice.

    The GOP doesn’t care about the toll they are taking on the American people only the toll they can charge the American people. One toll they’ve increased is that of income tax. Why should the wealthy pay their fair share when the GOP can make the middle- and low-income families of America pay their tab.

    The GOP is always asking if the Founding Fathers envisioned this or that. Well, the question to the GOP on the issue of economic warfare is: Is economic warfare on the people what the Founding Fathers envisioned from the government they founded?

  4. LayintheSmakDown

    January 27, 2014 at 5:52 pm

    Jack, that is where you are wrong. The middle class is always the target of anything the government gets involved in. The poor will continue to get their government perks because they are “entitled” and nothing DC does can touch them. The rich are always going to be ok as a group. It is the middle class as usual who will shoulder the burdens, and need austerity because they will never be able to pay for the mounting burdens

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