The logic of that assumption was always pretty meager. How would widespread layoffs of teachers, public safety personnel, and road crews become an impetus for private sector activity?

Armstrong economics professor Nicholas Mangee tackled this issue of austerity in his recent Savannah Morning News column: Our economic times: The fanciful world of expansionary austerity

He notes the ample evidence that sudden contractions in government spending do not spur growth — rather the opposite.

From Mangee’s column: Decades of experience suggest that painful economic contractions are only amplified when expenditures diminish within an economy regardless of which sector the cuts are being drawn from.

An example:

One need only look across the Atlantic for the most recent evidence on the importance of timing in policy implementation. Portugal, for instance, has found itself in a most precarious debt position even after obediently complying with the European Central Bankâ€s austerity measures. Why? Because the measures have deprived their economy of growth and, in turn, decreased gross domestic product.

When GDP falls, a countryâ€s debt-to-GDP ratio (the bellwether for a countryâ€s fiscal health) rises. Sadly, a similar story could be told for other EU members as the regionâ€s unemployment rate has just reached 10.8 percent with Spainâ€s rate climbing over 23 percent.

He also notes that there are clear advantages to reducing debt, if the timing is right: “Reeling in a countryâ€s debt is critical to its long-term growth prospects. But most economists understand the best time to do so is on an economic upswing.”

We should never have embraced policies during the Bush presidency that caused the yearly deficits and total debt to climb dramatically.

Mangee’s columns will be appearing every other Wednesday in the Savannah Morning News. It’s going to be good to have a regular dose of fact-based economic analysis in the local paper.

I’ve read lots of reactions about the failure, but my favorite so far comes from Nouriel Roubini’s blunt and entertaining Twitter feed:
“Super-Committee: Super-Failure, Super-Pathetic, Super-Gridlock, Super-GOP-Lunacy on Taxes, Super-Fiscal Drag in 2012 that ensures double dip”

There are obviously serious economic and political dimensions to today’s failure. Let me pick up on a few points:

• What happens to the deficit and debt now? Well, the failure has triggered cuts to begin in 2013 — barring some major Congressional agreements that now seem out of reach. Those include a hefty cut to the growth in defense spending and some cuts to Medicare that seem likely to be felt by someone.
• The Supercommittee’s failure puts a year-end spotlight on the 2011 payroll tax cut  and on federal funding for extended unemployment benefits. It’s simply stunning to me that the Obama team hasn’t gotten more credit for that payroll tax cut, which is a key reason the nation’s economy has not slid back into recession. But Republicans don’t want to give the president any credit for anything, and Democrats don’t want to admit that tax cuts can in fact be stimulative. I find it unbelievable that Republicans will actually stand in the way of a renewal of that cut for another year, but they just might do that. If they do, it will be horrible for Republicans as we enter the election year. Extended unemployment benefits, on the other hand, are likely a political nonstarter, but reducing that support for laid-off workers will do serious damage to our already teetering demand.
• With the failure of the Supercommittee, we’re actually poised for $7 trillion in automatic deficit reduction over the next decade. The Bush tax cuts are set to expire at the end of 2012, and, unless Republicans show some willingness to compromise more substantively on raising additional tax revenue, Obama and Congressional Democrats will let ALL of those tax cuts expire. For the long-term health of the country, letting all those cuts expire might be the best thing, but a tax hike on the middle class will be devastating in early 2013, when unemployment will still be high and when growth will likely still be anemic.
• So the fiscal damage of the Supercommittee’s failure really isn’t so great. The damage to the economy, however, could turn out to be extreme. And the failure seems to confirm that the U.S. is incapable of the negotiation and compromise needed to prevent a prolonged weakening of the national economy and of our standing in the world.

That’s a pretty grim analysis, but that’s where we are. For a logical way out and more optimistic way forward, I’d suggest reading Ezra Klein’s column about going back and picking up the Bowles-Simpson plan.