Austerity Hasn't Failed. It Hasn't Even Been Tried.

If it doesn’t involve a significant spending cut, how can it be austerity?

With a growing chorus of voices pronouncing austerity a failure on both sides of the Atlantic, that’s an important question. Unless we’re agreed that austerity has actually been tried, we’re hardly entitled to announce, as Ezra Klein has done, that austerity is “not, on any level,working”

Where to begin? Take taxes. Do they count as an austerity measure? The Washington Examiner says no:

you’d think European austerity was just about spending cuts. Quite the contrary. Although [Paul] Krugman curiously fails to mention the word “taxes” in his latest column, tax increases have most certainly played a part — and in many cases the largest part — in the European austerity packages he is decrying.

The Organization for Economic Co-operation and Development reports tax hikes made up 47 percent of France’s deficit-reduction package — $21.5 billion out of $46 billion. In Greece, 54 percent of their austerity package came from higher taxes, and in Portugal, the breakdown was 62 percent tax hikes and only 38 percent spending cuts.

“Such reliance on tax increases,” the Examiner continues, “is the exact opposite of what economic history recommends. As a recent OECD report concluded, ‘International experience shows expenditure-based fiscal consolidation tends to be more successful’ than increasing taxes.”

Nevertheless, Slate’s Matt Yglesias is right to warn against redefining austerity so that “tax hikes don’t count” A true austerity package that included, say, across-the-board tax increases wouldn’t be less austere. One key to understanding austerity is that it doesn’t map neatly onto the right-left divide in Western politics. Another key is that some approaches to austerity are better at fostering economic growth than others. Massive tax hikes as part of an austerity package might show better results when it comes to slashing deficits, but at a price in productivity.

The trouble with Europe’s post-crisis budgets, then, isn’t so much that they’ve increased taxes. It’s that they haven’t meaningfully cut spending. “Following years of large spending increases,” Veronique de Rugy explains, “Spain, the United Kingdom, France, and Greece — countries widely cited for adopting austerity measures — haven’t significantly reduced spending since 2008.” De Rugy points to data that shows those countries “still spend more than pre-recession levels,” with France and Britain making no cuts, and Italy increasing spending in 2011 “more than the previous reduction” between 2009 and 2010. Without significant, substantial cuts, tax increases alone don’t amount to austerity. Yglesias is correct that tax hikes can contribute to austerity. What tax hikes cannot do, however, is be austerity. Tax hikes are neither necessary nor sufficient for an austerity program.

Some, however, including de Rugy, go further, suggesting that, in practice, austerity and tax hikes are actually incompatible: