"They were the only government to take a position of austerity" There are several problems with the hypothesis that Germany's austerity experience is broadly a

"They were the only government to take a position of austerity" There are several problems with the hypothesis that Germany's austerity experience is broadly applicable. 1. Germany is an export-oriented economy operating within a currency union with countries that are less export oriented. This means that Germany has the benefit of an exchange rate that is lower than it would be if Germany was not a member of the Euro currency. 2. Germany did not actually take an austerity only approach: http://www.guardian.co.uk/world/2009/jan/27/germany-europe http://www.guardian.co.uk/world/2009/jan/27/germany-europe http://www.thelocal.de/money/20090724-20807.html http://www.thelocal.de/money/20090724-20807.html As far as Washington goes, our first stimulus package was shameful. Our nation's infrastructure is underdeveloped: http://www.economist.com/node/18620944 http://www.economist.com/node/18620944 Our electric grid is woefully inadequate: http://ideas.economist.com/blog/us-electric-grid-gets-less-reliable http://ideas.economist.com/blog/us-electric-grid-gets-less-r... http://www.infrastructurereportcard.org/fact-sheet/energy http://www.infrastructurereportcard.org/fact-sheet/energy Yet, about half of our $700 Billion USD stimulus went to tax cuts. Given the lack of evidence that economic output improved, it seems sensible to conclude that most of these tax savings went to either debt servicing or savings accounts, and I have no idea where the rest of that $700 billion went. It doesn't seem to have gone into any major infrastructure projects that I am aware of. When your entire problem is a lack of economic activity, investments should be made that produce positive net benefits. As a side note, to call Washington Keynesian is to fundamentally misunderstand Keynes. Truly Keynesian economic policy would not continuously run a budget deficit. A central tenet of Keynesian economics is that a Government saves when times are good and spends when times are bad. Washington spends when times are good and spends when times are bad. Edit: Also, one thing that is very important to keep in mind is that the States have received only marginal amounts of assistance with their budgetary woes. With the States needing to balance their budgets on an annual or bi-annual basis, the net effect of the federal stimulus package may have been nothing: http://www.thefiscaltimes.com/Blogs/Bartletts-Notations/2010/06/14/bartlett-state-local-budgets.aspx#page1 http://www.thefiscaltimes.com/Blogs/Bartletts-Notations/2010... When you include the states in the picture, maybe the U.S. is not as far from austerity as we would like to believe.