In economics, austerity refers to a policy of deficit-cutting by lowering spending often via a reduction in the amount of benefits and public services provided. Austerity policies are often used by governments to try to reduce their deficit spending and are sometimes coupled with increases in taxes to demonstrate long-term fiscal solvency to creditors.

Supporters of austerity predict that under expansionary fiscal contraction (EFC), a major reduction in government spending can change future expectations about taxes and government spending, encouraging private consumption and resulting in overall economic expansion.

Critics argue that, in periods of high unemployment, austerity policies are counter-productive, because deficit cutting reduces GDP (which typically means less tax revenue to pay off the debt); and that short-term stimulus is necessary to deal with deficits in the long-term.

"Austerity" was named the word of the year by Merriam-Webster in 2010.

Austerity measures are typically taken if there is a threat that a government cannot honor its debt liabilities. Such a situation may arise if a government has borrowed in foreign currencies that they have no right to issue or they have been legally forbidden from issuing their own currency. In such a situation, banks may lose trust in a government's ability and/or willingness to pay and either refuse to roll over existing debts or demand extremely high interest rates. In such situations, inter-governmental institutions such as the International Monetary Fund (IMF) may demand austerity measures in exchange for functioning as a lender of last resort. When the IMF requires such a policy, the terms are known as 'IMF conditionalities'.

Robert Bernard Reich ( /ˈraɪʃ/; born June 24, 1946) is an American political economist, professor, author, and political commentator. He served in the administrations of Presidents Gerald Ford and Jimmy Carter and was Secretary of Labor under President Bill Clinton from 1993 to 1997.

Reich is currently Chancellor's Professor of Public Policy at the Goldman School of Public Policy at the University of California, Berkeley. He was formerly a professor at Harvard University's John F. Kennedy School of Government and professor of social and economic policy at the Heller School for Social Policy and Management of Brandeis University. He has also been a contributing editor of The New Republic, The American Prospect (also chairman and founding editor), Harvard Business Review, The Atlantic, The New York Times, and The Wall Street Journal.

Reich is a political commentator on programs including Hardball with Chris Matthews, This Week with George Stephanopoulos, CNBC's Kudlow & Company, and APM's Marketplace. In 2008, Time Magazine named him one of the Ten Best Cabinet Members of the century, and The Wall Street Journal in 2008 placed him sixth on its list of the "Most Influential Business Thinkers". He was appointed a member of President-elect Barack Obama's economic transition advisory board.

John F. Stossel (born March 6, 1947) is an American consumer reporter, investigative journalist, author and libertarian columnist. In October 2009 Stossel left his long time home on ABC News to join the Fox Business Channel and Fox News Channel, both owned and operated by News Corp. He hosts a weekly news show on Fox Business, Stossel, which debuted on December 10, 2009. The show airs in prime time every Thursday, repeating on both Saturdays and Sundays. Stossel also regularly provides signature analysis, appearing on various Fox News shows, including weekly appearances on The O'Reilly Factor, in addition to writing the Fox News Blog, "John Stossel's Take".

Stossel practices advocacy journalism, often challenging conventional wisdom. His reporting style, which is a blend of commentary and reporting, reflects a libertarian political philosophy and his views on economics are largely supportive of the free market.

In his decades as a reporter, Stossel has received numerous honors and awards, including nineteen Emmy awards and has been honored five times for excellence in consumer reporting by the National Press Club. John Stossel is doctor honoris causa from Universidad Francisco Marroquín. Stossel has written two books recounting how his experiences in journalism shaped his socioeconomic views, Give Me a Break in 2004 and Myths, Lies, and Downright Stupidity in 2007.