For years, the GOP has been insisting that austerity is the only road out of the over-spending ways of America. Because of this, conservatives around the country are convinced that austerity to rapidly reduce the deficit is what this country needs. The GOP was elated when a study came out in 2010 by economists Carmen Reinhart and Kenneth Rogoff that focused on debt-to-GDP (Gross Domestic Product) ratio.
The report concluded that when a country’s debt reaches a threshold of 90%, economic growth slows down considerably. Using the notion that the United State deficit is reaching or may even already be above this threshold, the GOP derived their arguments from this seemingly groundbreaking study. The GOP has been using the data from the Reinhart-Rogoff study to support their austerity agenda, proposing that policies would help the economy should there be a downward spiral.
However, what the GOP failed to realize was that the Reinhart-Rogoff report they so readily embraced was, in fact, riddled with errors. After the report’s errors were discovered by a University of Massachusetts graduate student, the report’s mistakes were blamed on “Excel spreadsheet error.” Yet overview of the report after the initial errors were discovered concluded there were additional errors within the most crucial data of the report, essentially making the Reinhart-Rogoff report a faulty and unreliable source of data.
Nevertheless, the story goes much deeper than just a few errors on the report. Once the errors were corrected in the report, nothing in the data associated an economic spiral with a 90% debt-to-GDP ratio.These errors basically nullify any statistical support of the GOP’s previous arguments that used this report as evidence to push for austerity. The GOP was so thirsty for austerity that they overlooked fatal errors of the Reinhart-Rogoff report and, even worse, lawmakers influenced by this report passed one of the most detrimental fiscal policies this country has had during a recession since 1980. All of this because the GOP allowed their austerity agenda to be fueled by an error-ridden report.
The Reinhart-Rogoff incident just further supports the idea that the GOP has a tendency to overlook and ignore crucial mistakes as they could have easily verified the report before making it the foundation for their austerity campaign.
Krysta Loera is a writer and researcher with Ring of Fire.