This is some of the better news I have heard in awhile. The Center for American Progress has turn against the push for austerity. In a new report the organization points out the policy arguments for a grand bargain are incredibly weak right now and the politics are mostly hopeless. From Michael Linden at CAP:
To start with, all of these changes mean that the deficit should no longer be the country’s most pressing economic concern. The predictions that the abnormally large deficits of the past several years would inevitably lead to spiking interest rates or ruinous economic collapse have proved to be extraordinarily wrong. More importantly, between the legislated spending cuts and revenue increases and the slowdown in health care costs, the medium-term fiscal projections now look downright tame. Even the long-term outlook appears far less dire than it did just a few years ago. And the argument that higher debt leads to slower growth over a 90 percent of GDP threshold has collapsed. When considered all together, there is clearly no need for deficit reduction to take precedence over every other important issue facing the country. We need to stop allowing deficit concerns to hijack every other policy discussion. [...]
Few policymakers or pundits have adjusted to the current reality. We have already made enormous progress toward debt reduction, and the long-term problems are not nearly as dangerous as previously thought. Furthermore, the push for debt reduction has, at best, made it harder to boost economic growth; at worst, it has actively dragged the economy down. The time has come to recognize and respond to the new reality: It’s time to hit the reset button on the entire fiscal debate
These are all perfectly sound arguments against austerity but they have been made by many other organizations, including FDL, for a long time.
What makes this move by CAP important is that CAP has traditionally been extremely close to the Obama administration. It has been one of the prime intellectual defenders of Obama’s policies and often a source for trial balloons. If CAP is turning against the push for deficit reduction, it is a good sign that the political winds among Democrats in Washington have clearly started to shift.