I’m no expert in macroeconomics, but that doesn’t stop me from having thought about it and formed some opinions. They might be completely wrong, in which case I hope someone will enlighten me.
I don’t think that austerity in times of trouble is necessarily a good idea for governments. I’ve always pictured the government, in this arena, to be like a compensating reservoir: in times of plenty, it should store up some of that plenty against lean times; and in lean times, it should release some of that store. This certainly isn’t a new idea. After all, isn’t that what Joseph told Pharaoh to do?
The Eurozone has been trying the bitter medicine of austerity, and from what I hear it isn’t working very well.
In the US, the states have no choice but to practice austerity when their economies tank. That directly causes higher unemployment (state and municipal workers are let go). It also indirectly causes unemployment as projects such as bridge repair are deferred (construction workers are idled), and the unemployed are unable to purchase goods and services from their neighbors. That looks like a death spiral to me.