How the politics of debt explains everything
theweek.com
theweek.com
In terms of the business cycle, the author has a point. The bond mark has been deemed "too big too fail" and so creditors will always get bailed out. This is a problem.
But austerity is primarily aimed at the long term problem of living within one's means. This is independent of the business cycle. If your debt is increasing constantly, something has got to give. Even if you do default, you still need to figure out how to balance the budget in the future.
Reducing spending power through austerity policies directly reduces the GOP. Lower GDP means lower taxes. This is practically guaranteed to make debts worse. You don't balance the budget by cutting a large portion of the revenue. Historically - as Prof. Blyth shows in his academic work - austerity programs have always lead to increasing debt.
> the long term problem of living within one's means
Then why aren't austerity programs aimed at the people that actually overextended their spending: the banks/etc that bet against everyone else by becoming such a large systemic risk that they had to be bailed out? ("too big to fail")
If you want a much better description of Prof. Blyth's point that he only briefly summarized in this article, I suggest watching the talk[1] he gave last year.