1. Here is a seemingly balanced article on the issue of how quickly to reduce spending (if it isn't relatively balanced, I'm too stupid to notice):
http://www.voxeu.org/article/fiscal-consolidation-what-speed
2. There is a surprising dearth of research indicating that high debt-to-GDP loads negatively influence growth and other macroeconomic variables. What Necrosis is referring to in the OP is a paper that many in the pro-austerity camp leaned on as definite evidence of this proposition, a paper whose findings were recently found to be null due to an excel spreadsheet error.
3. Looking to Japan's plight for insights on the U.S.'s situation may be instructive, but a case study such as this is extremely limited and cannot compare to the quantitative analyses carried out by economists on a regular basis, analyses which often range over a century plus of data and dozens of countries. It is these analyses which continually fail to demonstrate a causal link between increased debt-to-GDP and lower growth.
4. As Necrosis indicates, what I'll here call "stimulus-positive" countries (countries that launched significant stimulus efforts in the midst of the latest downturn) have fared much better than stimulus-negative ones during the post-Great Recession period. Still, it is early days yet and it may be that in exchange for extreme short-term pain, the pro-austerity countries will be rewarded in a way the stimulus-positive ones will not, and conversely it may be that the stimulus-positive countries will suffer in the long-term as a result of not adopting austerity (or, waiting too long to do so).
5. Gigantor, I'm not sure what you mean when you say the peripheral Eurozone countries haven't really engaged in austerity. Is this a semantic issue where you're leaning on an alternative notion of 'austerity'?
6. Further, in the case of the U.S., what alternative to actual policy do you presume would have been better? Doing nothing? There seems to be an implicit prescription behind your words that some mysterious alternative should have been adopted. An oft-forgotten element of these discussions is that policymakers are making decisions with a limited set of options before them. So, what was a viable alternative to the Obama Administration's emphasis on credible medium-term (not short-term, clearly) fiscal consolidation which would have us in a superior economic position by now or in the future?
Good thoughts from Syntaxmachine.
On #5, The majority of countries in the EU did not cut baseline budgets, that's what the "Anti-Austerity" movement is claiming. That the U.K. and such are savagely cutting budgets and leaving people to die in the streets and causing a depression. The cutting really didn't happen. Austerity isn't cause of the Eurozone recession, to say so is silly.
#6 - I would love to raise interest rates to rebuild savings and capital and for the govt. to start enforcing the rule of law when it comes to the financial sector. Break up the TBTF institutions and repeal the ACA, start credible work on reforming entitlements etc. Notice that these things are part of a foundation and are structural. More stimulus, more suicidal Fed policies are like injecting a terminal cancer patient on his death bed with meth and morphine to wake him up for a bit. They aren't long term solutions, simply band aids.
Like Japan, when you engage in band-aids with fiscal/monetary gimmicks you just may end up doing those forever and burning up a hell of a lot of capital on mal-investment. I will admit that Japan is unique in its demographics and export focused economy, but the situation with their zombie banks and industries, real estate bubbles, their own stock market bubbles are similar to to ours in the U.S. There response to those bubbles bursting also mirrors ours in many ways.
When it comes to Debt-GDP or debt as a whole, my biggest worry is the overall interest payments as part of the federal budget. Its a hell of an overhang at this point (~300 billion and growing) and with the Fed policies + Federal borrowing and debt accumulation backing the U.S. into a policy corning, we may never, ever see real interest rates rise and the middle class+savers+retired will forever be robbed. It also puts the U.S. in a bind with Treasury auctions, how long can the Fed keep buying ~65% of all U.S. debt? What if a few nations get shaky knees and sit out an auction? If interest rates rise 1% or so on U.S. Treasury's, than the Federal Govt. is fucked. There isn't a lot of wiggle room.
I tried my best to address your questions, but it's early and I haven't had any coffee. Pick it apart and I will do my best to refine my answer.
If you want an actual policy discussion I would imaging it would require its own thread.
