Austerity Hits the US! Really?

On March 1, 2013 President Obama signed the Budget Sequestration order that cuts federal government spending. The video clip above, from Russia Today (really), takes a good look at what the effects might be on the World Economy (not good).

Sequestration is essentially a great natural experiment in which Keynesian arguments about the role of countercyclical government spending could be tested. My best guess is that the experiment will never be run. You can read my full analysis here. The role of government spending is the great macroeconomic question of the 20th Century and it won't be resolved in 2013.  We will certainly still be arguing about it 100 years from now.