Austerity is a poor way to help an economy.

You underestimate earnings of the poor. Most of the earnings of the poor have come from their labor, not transfer payments. Absolutely, but the poor rely on a greater number of subsidies to survive. I never meant to suggest that all or even most of lower-income money came from transfer payments, only that these are the people who are hurt when these things diminish. 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. Here in many ways, is the crux of the whole discussion. Using small numbers, if you take ten people, 9 of whom are scraping by on 40,000 a year and 1 of whom makes 40 million, you get to say, "Oh look! Our GDP is 40,000,040,000! We"re winning! If you redistribute income amongst the same ten people so that one is making 20 million and the rest make varying multi-millions, yet the overall total is more like 38 million, the new GDP may be lower, but you"d be hard-pressed to argue that just because of this all the people are suffering more as a result. But that"s a huge and separate argument. For the purposes of this debate, my point is only that GDP is a false metric for the success of a system. 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". It"s surprisingly easy to save when you already have enough to live on and some left over, isn"t it? The problem here is a confusion of correlation and cause. Richer individuals and countries DO tend to have greater savings, but the savings are not the cause for their wealth; rather because they have abundance in productivity or income they are able to save, not the other way around. In fact hording larger and larger stockpiles of keep that money out of circulation, and with no circulation, economic stagnation sets in. 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] The misconception in this perspective is rooted in the assumptions about what gets done with money otherwise. If businesses were always constantly re-investing and expanding and hiring, everything you say above would be completely true. The problem is that this is not what businesses typically do. In our current recession for example, more and more money is being pocketed as profit (itself a representation of inefficiency that isn't ending up back in the business or back into the economy as a whole) and not going into hiring or opening more domestic factories or anything else beneficial. In other words, if it's a question of taxation-stimulus-cash flow-recovery VS. Tax cuts-cash flow-recovery the latter option, lasses-faire private-sector wins out. But that isn't the reality of the situation. It is tax cuts-profit-hoarding-outsourcing with no recovery in sight. The bottom line is that Austerity does nothing to encourage or coerce businesses to do anything to hire more people or invest back in the country more in the form of infrastructure or manufacturing. Yes, in theory it gives them the option, but our economic policies have only bent over backwards to give them that option for decades and the end result has not been economic improvement. 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. My above argument covers this as well. Businesses don't invest in infrastructure without short-term gain reasoning. Building or improving a road is something that WILL pay off for a company, but not in the short-term. Beholden to their stockholders who depend on reports of improvement with literally every quarter, the private sector is in no place to do anything that doesn't enhance share value within the next six months. Some things simply take longer than that. Take the depression. Conservatives frequently like to argue that New Deal policies did nothing to help the country get out of the Great Depression and that it was all World War II and the private sector that made recovery possible. But they leave out an important factor: Those businesses would have been in NO position to adroitly and rapidly manufacture tanks and planes and bombs without roads to move them on. That army would not have been in a position to contribute the manpower we did if the previous generation they recruited from had nothing to eat. And those businesses would not have had unadulterated access to foreign markets in post-war reconstruction without a government capable of stepping in and making these things possible. Long-term improvements pay off in the long term and lend greater prosperity. Short-sighted profit-seeking, while amazingly good for a very small handful of individuals who get to reap those profits, is not actually a sustainable model on which to base a national economy. 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. You're leaving out long-term gains. If only 90-billion comes back in the short term, but leads to a gain of 50-billion in the long term, the economy over all has in fact seen great benefit. You can only arrive at the conclusion that the money is wasted if you don't look at the long term. In closing, I would respectfully ask that my opponent address my opening examples. Right now, I feel as though I've given two real-world examples of where the opposite of what my opponent says should happen has happened, and CON has completely ignored these examples. It reminds me of the old Reagan joke (yes, levied against my way of thinking I'll grant) "An economist is someone who sees something that works in practice and wonders if it would work in theory" Iceland works in practice on my ideas. Greece is failing in practice on my opponent's. All CON has done is discuss theory about what *should* happen, not what does. I look forward to your response. (My time is shorter than I'd like, I will try to do more sourcing in my conclusion)