Perils of Austerity

An article in June 30 Waterloo Courier,   "Bank of England Warns of Austerity Measures," quotes Adam Posen, a member of the Bank of England's Monetary Policy Committee.  He says Britain could be pushed back into a recession by the government's austerity moves.  He also said, "I have laid awake a number of nights recently trying to figure out how big is the risk that the major economies are repeating the mistake of the U.S. in 1937.......".
   So which 1937 mistake was he talking about?    In that year,  the New Deal programs had nearly beaten the depression.  Unemployment had dropped from 25% in 1933, when Roosevelt  took over, to less than 10%, and was still dropping.  So conservatives persuaded  FDR to shift emphasis from solving the depression to balancing the budget.  Spending was slashed and taxes were raised.  And within a year the country was pushed right back into a depression.
   Thomas Frank, in an article in June 30 Wall Street Journal,  "Avoiding the Austerity Trap, " calls deficit reduction an unhealthy obsession,   explaining that it's actually a war against "entitlements."