Daniel.

“The turn to austerity after 2010, however, was so drastic, particularly in European debtor nations, that the usual cautions lose most of their force. Greece imposed spending cuts and tax increases amounting to 15 percent of GDP; Ireland and Portugal rang in with around 6 percent; and unlike the half-hearted efforts at stimulus, these cuts were sustained and indeed intensified year after year. So how did austerity actually work?

The answer is that the results were disastrous—just about as one would have predicted from textbook macroeconomics. Figure 2, for example, shows what happened to a selection of European nations (each represented by a diamond-shaped symbol). The horizontal axis shows austerity measures—spending cuts and tax increases—as a share of GDP, as estimated by the International Monetary Fund. The vertical axis shows the actual percentage change in real GDP. As you can see, the countries forced into severe austerity experienced very severe downturns, and the downturns were more or less proportional to the degree of austerity.”

“When I asked my interviewees what most contributed to their level of career success, they usually discussed how hard they had worked and how uncertain were the outcomes — not the help they had received throughout their lives to gain most of their jobs. In fact, only 14 percent mentioned that they had received help of any kind from others. Seeing contemporary labor-market politics through the lens of favoritism, rather than discrimination alone, is revealing. It explains, for example, why even though the majority of all Americans, including whites, support civil rights in principle, there is widespread opposition on the part of many whites to affirmative action policies — despite complaints about “reverse discrimination,” my research demonstrated that the real complaint is that affirmative action undermines long-established patterns of favoritism.”

“The most useful political correction that could follow this wider recognition of the extraordinary dangers of premature austerity would be a cessation of the ten-year deficit targets that have polluted the policy debate in recent years. Earlier this week, the Economic Policy Institute and The Century Foundation released a briefing paper detailing why fixation on 10-year deficit reduction targets will almost certainly result in bad policy outcomes; the emphasis on top-line savings in these targets skates over more-important issues related to timing, composition, debt dynamics and political viability of upfront stimulus”

Boehner is right that no household could keep borrowing like that. He’s not quite right about a business though. Look at the accompanying chart. The orange bars show the net debts of Wal-Mart Stores, Inc. They have soared — up 5,760 percent since 1987. By comparison, the roughly 600 percent rise in the U.S. public debt over the same period looks restrained. Is Wal-Mart mad? How long can it go on just borrowing and borrowing and borrowing?

The answer is “as long as Wal-Mart keeps growing.” The white line shows Wal-Mart’s ratio of debt to earnings before interest, taxes, depreciation and amortization. And what that shows is that Wal-Mart’s debts have been rising to keep pace with its growing earnings. Similarly, for six decades U.S. government debt has been rising roughly in line with the growth of the economy. Over the last few years, it’s grown a lot faster because of cyclical economic weakness. The proper matter for debate is whether recent deficits are too large — not whether six decades is too long to run them.

I feel like I have been reading versions of this story for five years.