Robert Kuttner argues that while the Tea Party is more flagrant, the austerity movement is more insidious:
Though excesses on Wall Street combined with an ideology of regulatory default caused the second great crash, the aftermath (unlike in the Age of Roosevelt) has been a gift for the orthodox right. At home, the billion-dollar Peter G. Peterson Foundation, in close concert with President Obama’s own fiscal commission, has been promoting stringent cuts in domestic spending coupled with a value-added tax and a mandatory budget-balance formula.
In Europe, an aftershock of financial panic directed at government bonds has produced a perverse rescue strategy. The European Central Bank and the larger nations, led by Germany and France, have belatedly guaranteed Eurozone state bonds. But in return, the forces of fiscal orthodoxy have demanded and obtained a stringent program of austerity.
As John Maynard Keynes taught us, an economy cannot deflate its way to prosperity. If everyone tightens belts at the same time, there is not enough demand to buy available output, and the global economy sinks further. You eventually get budget balance, but with a needlessly depressed economy.