Austerity is a poor way to help an economy.

Thanks for your swift response Pro! -----Rebuttals----- R1: Austerity Harms the Poor/ Reduces Savings "A government indulging in austerity... takes savings and spending power from the poorer segments of the population." You underestimate earnings of the poor. Most of the earnings of the poor have come from their labor, not transfer payments. Average Earnings (Males) Based on Educational Attainment (2010): [1] High School and Equivalency: $46,203 Associate's Degree: $44,732 Bachelor's Degree: $79,779 Master's Degree: $99,519 The value of total production equals the value of incomes received because what is paid for goods and services produced exactly equals what is received as income by someone else. A nation's output thus constitutes its real income. Gross Domestic Product (GDP) is thus the total income earned by a society. Therefore, we should be focusing on how to improve productivity of a society to increase real incomes (output). Increasing marginal productivity will thus improve the incomes and therefore wealth of society. And the arguments that Pro is offering, that redistribution transfer payments are necessary to improve savings, is simply false. The redistribution payments of the type we are talking about usually subsidize the incomes of the poor at the expense of the rich, the latter whom save and invest more of their income, because they have a "higher propensity to save". [3] So, taxation or borrowing required to finance redistributive programs reduce savings and thus financial capital, leaving less to be invested in production. "how does balancing a budget result in people having more money to save?" The federal government pays for its programs through taxation, printing money (inflation), or borrowing (debt). Borrowing puts money in government's hands and ensures that the same money is not available for private investment. Thus investment capital is taken from the private sector to be put in the hands of government. This "crowding out" of private investment and the enlargening of the generally less efficient government thus destroys capital that could be productively put to use (business expansion for example). [4] "If, in the course of austerity, people suddenly have to live without public transportation, food or housing help, where does their extra money come from?" People would instead expect services such as transportation from the private sector. And as stated earlier, capital accumulation, a result of savings (which occurs when gov't stops borrowing funds) will lead to higher incomes. The NBER, as I cited last round, provided empirical evidence and analysis showing that "policies to foster physical capital accumulation will translate to a higher marginal products of labor, and thus improved real wages for the states' workers." The source that my opponent cites concerns monetary policy, about nation's floating their currencies. So this argument isn't really relevant to our debate. The source Pro cites does not contradict my earlier empirical evidence. "Stimulus can function as the kick-start to get an economic motor running" This is simply not true though. I will provide a simple analogy. Say a nation has a GDP of $1 trillion. If the government decides to borrow $100 billion from the nation's economy, it is taking out cash wealth and putting it back elsewhere, after administrative costs. It is like a leaky bucket and a pool. A bucket of water is taken out at one end, and poured at the other end of the pool. There is no net growth. You cannot grow an economy this way. If you take $100 billion from the private sector (debt borrowing) and spend it on say stimulus packages, and in the hypothetical scenario that the private sector gains say $90 billion after administrative costs are factored in --- there is no economic benefit. Contrast A nation must balance their budget, and have an efficient, competitive, and low-tax system. Policies should foster capital accumulation. With greater and more advanced capital, workers will have higher marginal productivities. Output, and thus the real wealth of a society will rise! If we want a stronger economy, we need to improve the wealth that society has, not redistribute and move it around in a way that is unconstitutional and economically unsound. If people are earning higher incomes, they will save and invest more, leading to more production and thus the employment of labor and goods and services (more employment and higher take home pay). To break it down in very simplistic terms, we need make sure the engine has the right filters, and can run properly. Then perhaps replacing the parts with more advanced technology will improve its performance. On to you Pro! Sources [1] U.S. Census Bureau, Current Population Survey, Annual Social and Economic Supplements, (www.census.gov/apsd/techdoc/cps/cpsmar11.pdf[PDF].) [2] Browning, Edgar. Stealing From Each Other. 2008. 4. Print. [3] http://en.wikipedia.org... [4] http://www.learnliberty.org...