spending

Who Said We Want Less Government Protecting And Empowering Us?

Dave Johnson — Tue, 13 Jul 2010 12:00:09 -0400

Cut spending? Wait - where did that terrible idea come from? Government is We, the People and its job is to protect and empower us. Why in the world would we want to cut back on that?

WSJ today, The Bush Tax Cuts and the Deficit Myth, "Runaway government spending, not declining tax revenues, is the reason the U.S. faces dramatic budget shortfalls for years to come."

Wait a minute. Back up. Where did this come from? Who, anywhere, any time agreed to cut government? Why do We, the People allow these anti-government zealots to pre-frame the budget deficit as a problem of government doing too much for us? Which government function is the "too much" part? Reigning in runaway corporations? Consumer protection? Worker safety inspections? Food safety inspections? Maintaining and modernizing our infrastructure? Educating people? The courts? Keeping the water and air clean? There is a long list of things our government does for us. Why would we want less of that?

Imagine if Democrats voted to just put $500 billion a year in rockets and shot the rockets at the moon, and spent the next 30 years demanding that the conservatives do their part and raise taxes to pay for that. Do you think the top 1% would just say, "OH, OK, let's do that." Of course they wouldn't.

But under anti-government conservatives all of these things that our government does to protect and empower us were cut to the bone or just ended, resulting in mine disasters, bank meltdowns, predatory corporations scamming all of us, and the BP oil spill. We, the people got poorer and less secure while the rich got really, really richer.

Why would anyone in their right mind think that was a good idea?

Conservatives cut taxes on the rich, resulting in the greatest concentration of wealth ever. The entire economy turned into an everything-to-the-top vacuum cleaner scheme, filled with scams shaking down and fleecing We, the People of everything we have and delivering it to a few wealthy corporation-owners. And then we get this bamboozlement that "the deficit" is out of control, so we have to cut back on anything that remains of government working for We, the People? I don't think so.

Think about the level of bamboozlement that is going on here. Conservatives cut taxes on the rich, and then spend the next 30 years saying, "OK, now you have to do your part and cut the things government does for the people." The whole thing was a scheme to deliver power to a few at the top. In Reagan Revolution Home To Roost: America Drowning In Debt you can see the step-by-step outline of the plan, in their own words. The deficit plan was right there for everyone to see:

Step 1: Cut taxes to "cut the allowance" of government so that it can't function on the side of We, the People. Intentionally force the government into greater and greater debt.
Step 2: Use the debt as a reason to cut the things government does for We, the People. When the resulting deficits pile up scare people that the government is "going bankrupt" so they'll let you sell off the people's assets and "privatize" the functions of government. Of course, insist that putting taxes back where they were will "harm the economy."
Step 3: Blame liberals for the disastrous effects of spending cutbacks.

So when did We, the People agree to this one-way bargain, cut taxes for the rich and cut what government does for us? We didn't, and we should stop acting like we did.

Every single one of us knows that the deficits are the result of tax cuts for the rich and huge military spending increases. If we want to fix the deficit problem we know exactly what to do.

Lessons From China's Stimulus

Dave Johnson — Tue, 27 Apr 2010 15:40:21 -0400

China and the United States have both engaged in economic stimulus plans. This provides an opportunity to compare, and hopefully to learn.

China's stimulus brought them through the economic crisis, even as they lost some exports because of the slowdown. They made the leap into alternative energy technology, spent $100 billion just for high-speed rail, and showed the world how fiscal stimulus works. Their growth rate is currently 13%. Ours is currently ... nowhere near 13%.

In November, 2008, China announced its $586 billion plan,

Beijing said it would spend an estimated $586 billion by 2010 on wide array of national infrastructure and social welfare projects. They would include new railroads, subways and airports and rebuilding areas like those devastated by the Sichuan earthquake in May.
… It would amount to about 7 percent of China's gross domestic product during each of the next two years.

So their stimulus totaled about 14% of their GDP. Our own stimulus was $862 billion in a $14 trillion economy, or about 6%. The differences between the priorities of the two plans are clear when seen on charts.

From a year ago: China's Stimulus Package: A Breakdown of Spending:

The first chart of our plan from the stimulus bill (as proposed) provides detail. The second chart from Think Progress shows major categories.

China focused on investment in public infrastructure, which leads to future economic growth. We are mired in conservative ideology so we focused on tax cuts, which do little more than increase our debt.

And we didn't get the spending started very quickly. According to a one-year analysis,"Through the end of January, roughly $334 billion in spending has been approved, of which $179 billion has actually left federal coffers. Another $119 billion has gone to tax cuts." and "only $31 billion has been spent on projects such as infrastructure, high-speed rail, broadband and health technology."

Quick lessons:

- China spent serious money, quickly. It worked.
- China focused on infrastructure. It worked.
- China has a national economic/man manufacturing strategy and invests in R&D and developing strategically important industries. We don't.
- Don't cut taxes, it only causes massive yearly deficits and accumulated debt.

Conservatives Caused Huge Deficits, Blame Obama

Dave Johnson — Sun, 07 Mar 2010 00:49:37 -0500

Headline at Drudge Report: Obama policies projected to add $9.7 trillion to debt by 2020... points to this story, National debt to be higher than White House forecast, CBO says,

President Obama's proposed budget would add more than $9.7 trillion to the national debt over the next decade, congressional budget analysts said Friday. Proposed tax cuts for the middle class account for nearly a third of that shortfall.

So here is the deal. This Drudge headline, saying Obama's spending "adds to the deficit" is a trick. Here is how it works. Suppose you take over a company that is losing $100 million a year, and your jobs is to turn it around. So perhaps the second year the company only loses $70 million, $30 million the third year, and breaks even in year four. You saved the company. But in those years the company "lost" another $100 million. Should you be fired?

President Obama took office as President of a country with a $1.4 trillion deficit - thanks to the failure of conservative policies. Their tax cuts, wars, military buildups, corruption and incompetence drove the borrowing WAY up, and then their deregulation, corruption and incompetence destroyed the economy, driving the borrowing up into the stratosphere.

If the borrowing just stayed the same at the $1.4 trillion level Obama inherited each year -- never mind that interest on all that borrowing gets higher and higher each year -- that would mean $14 trillion would be added to the deficit by 2020. That's a LOT more than the $9.7 trillion that Drudge and the conservatives are making so much noise about. Obama is dramatically reducing the borrowing, but they use trickery to make it look like he is causing it.

What about that $1.4 trillion deficit? That was the deficit for the 2009 budget year. Conservatives say -- over and over -- that Obama "tripled the deficit" in 2009. This isn't even a trick, it is just a lie. The final Bush budget year ended with a deficit of $1.4 trillion. Conservatives have been telling the public this was an "Obama Deficit" and use graphics and charts that label this last Bush budget as Obama's. Look at that chart, and then look at this. The first chart is nothing more than a lie, of course repeated endlessly.

But what else should you expect? Like the scorpion that stings the frog as the frog ferries it across the river, it's what they do. They screw things up, and then point the finger of blame at everyone else.

Common Sense on Budgets

Robert Borosage — Tue, 02 Feb 2010 10:39:34 -0500

Amid the blizzard of statistics, trillion-dollar deficits, howls about impending bankruptcy, and Republican stupocrisy that surround the budget, it is worth repeating a little common sense.

1. The huge deficits are caused primarily by the economic downturn, and the accompanying collapse in tax revenues (down to 14.7 percent of gross domestic product) and automatic increase in spending on unemployment, food stamps and the like. The Bush misrule—tax cuts and not paying for two wars, record military budgets and the prescription drug benefit—adds to the problem. The Obama Recovery spending—too small, not too large—adds the smallest amount to the pot.

2. Deficits will be reduced primarily by economic growth. Growth brings the deficit down from 10 percent of GDP to 5 percent in the Obama projections. Growth brings the deficit down in the Republican budget also (They cut over trillion from Medicare and Medicaid but that essentially pays for top end and corporate tax cuts).

3. The biggest challenge facing the country is still jobs and growth, not short-term deficits. The Obama budget projects unemployment to be at 9.8 percent when the domestic discretionary spending freeze kicks in. The supplemental jobs bills currently under discussion—$150 billion passed by House, $100 billion for Obama, $80 billion and falling in the Senate—are too small to make a difference. And it isn’t clear where the jobs will come from with consumers cutting back, states and localities cutting back and businesses putting off investments. With the “freeze” and the tea-baggers turning political attention to spending cuts, the biggest danger is that spending restraints and the rollback of Federal Reserve subsidies will retard recovery—and increase deficits as mass unemployment continues.

4. The long-term deficit challenge is almost entirely one of health care costs. Assuming the economy starts growing again, the long-term deficits are caused by soaring health care costs. Republicans limit these by abolishing Medicare and Medicaid, turning the former into a voucher program that will push more costs onto the retired and the latter into a block grant that will push more costs onto the states (or the poor and disabled). Comprehensive health care reform that gets both private and public costs under control is the only sensible way to deal with this challenge. Period.

5. The investment deficit is more serious than the budget deficit. We suffer a staggering deficit in investment in areas vital to our future —in 21st-century infrastructure, research and development, new energy, education and training, even sound bridges and safe water systems. If we are to compete as a high-wage country in a global economy, we must lead, not lag, in these investments. The president’s domestic freeze makes it virtually impossible to make the investments we need.

6. The freeze should be on military spending. Budgets are about our priorities. Show me where your money is, and I'll show you what you value. Obama is projecting a $700 billion military budget, the highest ever. This level of spending—and the global commitments and two wars it supports—is a threat to our national security. We are starving the investments we need to make at home, particularly in new energy and the green industrial revolution, to sustain troops across the world while fighting two wars. President Eisenhower, the former general, put a lid on the military budget, forcing the services to fight one another for funding, and putting pressure on the Pentagon to get a better grip on its waste, fraud and abuse. We should be reducing our empire of bases, and putting a lid on the Pentagon budget for years, moving the savings into areas vital to our future.

7. Some areas of the country are worse off than others. Unemployment averages over 10 percent, but it is far higher in our urban areas, catastrophic among young male minorities. Targeted public service jobs and training programs are vital if we are not to witness a continuing collapse of urban society. It is a tragedy these are not the centerpiece of the jobs agenda.

8. Some jobs programs are better than others. Public works—putting people to work doing work that needs to be done—is perhaps the most efficient. The current favorite of the administration, the jobs tax credit, is one of the worst. Virtually all of the money goes to subsidize employment that would take place anyway. The rest is probably gamed by dishonest employers. So this is like giving grants to business owners. It probably has some stimulative effect, but not much.

9. We spend too little, not too much. Federal spending has been averaging about 19 percent to 20 percent of GDP. The economic collapse has increased it to 25 percent. Obama’s budget will bring it back down to 22 percent and boasts that domestic discretionary spending to the lowest level of GDP since World War II. This is stupid, given our investment deficits. We’d be wise to sustain spending at about 24 percent to 25 percent of GDP, make the investments we need to create world class infrastructure, schools, affordable college, cutting-edge research and development, and a healthy start for all kids. And pay for it over the long run.

10. We pay too little in taxes, not too much. Yeah, I know this is lethal politically, but it is true. We’ve been raising about 18 percent of GDP in taxes, an inadequate amount for a modern industrial nation. Our corporations pay a lower effective tax rate than the average of industrial countries. Our wealthy pay a lower rate than their secretaries. We subsidize the hoarding of great fortunes, rather than distributing the benefits of growth equitably, thus generating rising tax revenues from workers. On every social indicator—health, longevity, education, social cohesion, crime, generosity—more equitable societies fare better than richer, less equitable ones like our own. These things aren’t political. They aren’t spun into message. They aren’t conventional wisdom. They are just common sense.

"Redistribution Of Wealth" Is Not The Issue

Isaiah J. Poole — Mon, 30 Jun 2008 13:25:21 -0400

The right-wing group Freedom's Watch champions a poll that says a majority of Americans don't want the government "redistributing wealth." It's a perfect example of asking the wrong question and getting a bad answer.