NEW YORK – In the aftermath of the Great Recession, countries
have been left with unprecedented peacetime deficits and
increasing anxieties about their growing national debts. In many
countries, this is leading to a new round of austerity –
policies that will almost surely lead to weaker national and
global economies and a marked slowdown in the pace of recovery.
Those hoping for large deficit reductions will be sorely
disappointed, as the economic slowdown will push down tax
revenues and increase demands for unemployment insurance and
other social benefits. The attempt to restrain the growth of
debt does serve to concentrate the mind – it forces countries to
focus on priorities and assess values. The United States is
unlikely in the short term to embrace massive budget cuts, à la
the United Kingdom. But the long-term prognosis – made
especially dire by health-care reform’s inability to make much
of a dent in rising medical costs – is sufficiently bleak that
there is increasing bipartisan momentum to do somet