The point is austerity in national spending is a terrible answer to the
question of how to make an economy recover. The absolute worst thing to do
in a bad economy is to stop the government spending on core infrastructure
which helps the economy in the long term. You put more people out of work,
who drop out of the income tax paying and discretionary spending pool and
pile onto the already bloated unemployment rolls. An economic downturn is
the worst time for blanket austerity, you need to do that in the good
Policies which create 60% youth unemployment are simply not a recipe for
economic recovery or social success. Wasteful policies should be cut back
always but cutting back on basic services is beyond dumb and counter
productive. A functioning economy equals greater tax base. The sooner
you can return to a functioning economy the better, even if it means
taking on some debt. The payback is non-linear.
If your goal is to drive down the cost of nearby labor or bankrupt your
neighbor so that you can swoop in and buy up their assets cheap, then sure,
blanket austerity is a great thing.
Krugman has written many columns on this if you want to get a Nobel prize
in economics laureate's take on the situation.