Macroeconomics in the United States today appears to
be a site of intense controversy between supporters of
more aggressive stimulus measures and supporters of
austerity. These policy debates, while important, tend to
obscure the strong methodological and theoretical
consensus in the economics profession today. All major
schools of mainstream macroeconomics are committed
to a vision of the economy in which rational agents
choose the optimal path over time, and in which any
sources of instability are fully offset by a benevolent
central bank, at least in normal times. These core
intellectual commitments of modern economics have
contributed to the weakness of efforts to reduce
unemployment in the US and Europe. This paper first
describes the intellectual failure of the most prominent
arguments for austerity, and then argues that the deeper
consensus in macroeconomics has nonetheless made it
difficult to make consistent arguments for sustained
deficit spending or for making lower unemployment a
high priority relative to other macroeconomic goals