I have doubts about the idea "spend what you have". It is framing wrongly the problem. Money are not something "you have". Money are "a promise" to get something "in the future". Evaluating how much that promise "will be worth it" is complex.

To give an example "at the limit" - sometimes easier to see the issues. Assume all people in the world die except 2 people, if they inherit all the wealth, each will be multi-billionaires (or something - no clue how much money is in the whole world). That would not mean they could do a lot with that "money".

Back to austerity. I agree with you that the key is "spending in reasonable ways". But to understand what is reasonable you must make a projection. And that is the hard part. A projection will probably affect the result. Of course you are correct you can't just say we will spend 10x more because we will have 10x more, so there are limits...