The Rhetoric of Austerity

In 1991, Albert Hirschman published The Rhetoric of Reaction, identifying three arguments that have been used to oppose social programs since the French Revolution. He called them the perversity thesis (the program hurts the people it claims to help), the futility thesis (the program accomplishes nothing), and the jeopardy thesis (the program threatens something we already have). All three are in circulation today, and can be understood as stages in a cycle.

Stage 1: Create the crisis

The cycle begins with a deliberate fiscal choice. Tax cuts reduce revenue. The resulting deficit becomes the justification for cutting programs that had nothing to do with the shortfall.

This is not a secret. Reagan’s budget director David Stockman told Senator Daniel Patrick Moynihan that “the plan was to have a strategic deficit that would give you an argument for cutting back the programs that weren’t desired.” One of Reagan’s advisers explained to Friedrich Hayek that the president permitted large deficits because they made “absolutely everyone convinced that no more money can be spent.” Grover Norquist put it more plainly: the goal was to shrink government “down to the size where we can drown it in the bathtub.”

The reconciliation bill signed in July 2025 increases the federal deficit by $3 trillion. It also cuts over $1 trillion from Medicaid and SNAP.

Stage 2: Cite the crisis (jeopardy)

With the deficit in place, the jeopardy thesis follows. Programs that were affordable before the tax cut are now portrayed as threats to fiscal stability.

Hayek warned in 1944 that the welfare state would lead to totalitarianism, though he also endorsed a minimum of food, shelter, and clothing for all. Reagan declared in 1981 that “government is not the solution to our problem; government is the problem.” At an Easter lunch in April 2026, President Trump said: “We’re fighting wars. We can’t take care of day care.” The video was posted to and then removed from the White House website. During his 2024 campaign, Trump had promised that tariff revenue would easily cover childcare.

The FY2027 budget requests $1.5 trillion for defense, a 44 percent increase, while cutting domestic programs by 10 percent. Medicaid is put on “a more sustainable path.”

Stage 3: Defund, then declare failure (futility)

Programs that survive the jeopardy stage are starved of operational capacity. Administrative capacity is cut. Eligibility rules are made more complex. The resulting dysfunction is then cited as evidence that the programs were never effective.

Stuart Butler of the Heritage Foundation described the strategy in the 1980s: build a “parallel system” of private accounts that would gradually create a constituency for dismantling public programs. “You wean people gradually off of social-insurance risk management into private risk management.” The FY2027 budget follows this template. Research grants are replaced by “competitive awards.” The Rural Business Service is eliminated because the Small Business Administration “already” serves rural areas. LIHEAP, which provides heating and cooling assistance to low-income families, is cut on the premise that increased private energy production will make the program unnecessary.

The SNAP cuts in last year’s reconciliation bill illustrate manufactured futility. The bill cuts federal administrative funding in half, expands complex work requirements that increase eligibility errors, and then penalizes states based on their error rates. Arizona has already lost 47 percent of its SNAP participants, including 180,000 children, since the bill took effect.

Stage 4: Frame the cuts as compassion (perversity)

At the final stage, the cuts are reframed as kindness. Removing people from programs is described as freeing them from dependency.

This is the oldest argument in the cycle. The 1834 New Poor Law in England cut food rations in workhouses and separated families, on the theory that generosity created poverty. Charles Murray recycled the same claim in 1984: “We tried to provide more for the poor and produced more poor instead.” Hirschman noted that except for a slight toning down, the melody was the same, 150 years later.

The perversity thesis has never been limited to one party. Bill Clinton signed the Personal Responsibility and Work Opportunity Act in 1996 to “break the cycle of dependency.” In 2021, Senator Joe Manchin told colleagues that parents would use the expanded Child Tax Credit to buy drugs. The credit, which had cut child poverty to its lowest rate on record, expired. In the current budget, SNAP work requirements are framed as “returned accountability.”

Hirschman observed that people do not gouge out their eyes to qualify for disability benefits. When industrial accident insurance was introduced in Europe, employers claimed workers were mutilating themselves on purpose. The reports were found to be highly exaggerated.

The contradiction

The three arguments require three different versions of reality. Perversity assumes a world so responsive that every policy triggers a backlash. Futility assumes a world so rigid that policy bounces off. Jeopardy assumes the policy is effective enough to be dangerous.

These are opposite claims about how the world works, used to justify the same action: cutting programs. Hirschman observed that this logical incompatibility does not stop people from deploying both arguments against the same policy, sometimes in the same debate.

The arguments are chosen for what they justify, not for whether they are true.

Estimates of last year’s reconciliation bill’s Medicaid and SNAP cuts project a $154 billion reduction in state GDPs, 18 percent more than the $131 billion in federal savings they generate. Households in the bottom 10 percent lose an average of $1,600. Households in the top 10 percent gain $12,000. The arguments rotate. The direction of the transfer stays the same.

The FY2027 budget proposal follows the same pattern. It runs a $2.2 trillion deficit while framing $73 billion in domestic cuts as fiscal necessity. The cuts amount to about 3 percent of the deficit they sit inside.

The next time someone tells you a program costs too much, accomplishes nothing, and hurts the people it serves, all at once, the pattern is worth recognizing. Hirschman’s framework makes it easier to see, and harder to take seriously.