In his article, “Austerity: Why and for Whom?” Richard Woff, UMass Amherst economics professor emeritus, analyzes austerity measures that are likely to be imposed as a result of extreme governement borrowing.
Austerity, Wolff defines, is the guarantee demanded by lenders. “Lenders want governments to raise taxes or cut government spending or both. Governments will then have more money available to pay interest on loans and to repay those loans. Governments that fail to impose austerity will face higher interest on new and renewed loans or will be denied loans which would cripple those governments’ usual operations.”
The weight of these typical measures (raising taxes and cutting government spending) generally falls on the workers. Wolff proposes alternatives including levying a tax on assets over $100,000, exiting the wars in Iraq and Afghanistan and ending tax exemptions for super-rich private educational institutions. (In These Times, 7/15/10)