The economically damaging effects of austerity are causing corporations to sit on huge reserves of cash, rather than investing in their businesses and hiring workers. Corporations are holding $1.7 trillion in reserves due to slow economic growth that is being hampered by budget cuts at the Federal, State and local levels. Corporate profits are at record levels, while corporate tax revenues are dwindling.
One only has to study Europe recently (or the Hoover Administration) to see that cutting public spending in a severe recessionary time will only fuel the recession. So will corporations holding large cash reserves, unwilling to invest in the economy.
