Posts Tagged ‘budgets’


Special mention

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Special mention

Tom Toles Editorial Cartoon - tt_c_c160329.tif 08d711fd-ae6e-4025-9bfa-fd742e744cc4 (2)


Special mention

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The right-wing loves to talk about the injustice of passing on the tax burden of current deficit spending to our children and grandchildren. What they don’t want to discuss is how unfairly the children of today are being treated.

Right now, the next generation is getting shortchanged all around, with children too often treated as an afterthought in policies meant to appeal to their elders. The United States tolerates the highest rate of child poverty in the developed world. Yet federal expenditures on children — including everything from their share of Medicaid and the earned-income tax credit to targeted efforts like child nutrition and education programs — fell 1 percent last year and will fall an additional 4 percent this year, to $428 billion, according to estimates by the Urban Institute based on the Congressional Budget Office’s projections.

The federal government spent $8 billion less on child health last year than it did the previous year, as fiscal stimulus programs to combat the Great Recession were phased out. It cut aid to states to pay for primary education by about the same amount.

The states, which provide more than 60 percent of the total government dollars spent on children, aren’t in great shape either. According to the Urban Institute’s estimates, state and municipal spending on children fell in each of the last three years.

And the outlook is not much better for the coming decade. Despite health care reform, which will lead to coverage for millions of uninsured children, the Urban Institute forecasts that federal expenditures on children — including direct spending and tax breaks — will shrink to about 2.3 percent of the nation’s economic output by 2022, from 3 percent last year.

Classes begin tomorrow and I don’t have time to comment on all the right-wingnuts out there. So, let me outsource the commentary to those who, right now, have the time and patience to read and think seriously about their drivel. . .

Like Vincent Navarro, who explains what mainstream economists aren’t telling us about the Euro:

One of the phrases frequently written in economic circles in the United States (and to a lesser degree in Europe) is “the Euro is going to collapse.” Those who repeat that phrase over and over again do not seem to know how the Euro was established, by whom, and for whose benefit. If they knew the history of the Euro, they would have noticed that the major forces behind the Euro have done very well and continue to do so. As long as they continue to benefit from the Euro’s existence, the Euro will continue to exist.

And Noah Smith, who takes on Kip Hagopian and Lee Ohanian on inequality (and, in the process, gives spaghetti a bad name):

There’s no thesis here, other than the idea that “income redistribution is bad.” I think this reduces the credibility of the authors. Hagopian and Ohanian clearly started from a policy conclusion  (“income redistribution is bad”) and went in search of reasons why this might be true, then went in search of data that supported those reasons. That’s exactly the reverse of how I think scientists ought to do things. First you look at the data, then you make sense of it, and then you decide which policy makes the best sense. The fact that Hagopian and Ohanian seem to have done the reverse of this makes me think “Oh, here are another couple of guys who want lower taxes on the rich, and will grab hold of any theory or statistic that seems like it supports lower taxes on the rich.”

So even though, for me, some of the arguments were convincing – i.e., some of the spaghetti landed in my mouth, and the rest on my shirt – the scattershot nature of the argumentation makes me less likely to buy into the overall policy conclusion. I don’t think this is how economic policy advice should be done.

And Paul Krugman, who focuses on one among the many “multiple errors and misrepresentations” in Niall Ferguson’s Newsweek cover story.

Now, people on the right like to argue that the CBO was wrong. But that’s not the argument Ferguson is making — he is deliberately misleading readers, conveying the impression that the CBO had actually rejected Obama’s claim that health reform is deficit-neutral, when in fact the opposite is true.

More than that: by its very nature, health reform that expands coverage requires that lower-income families receive subsidies to make coverage affordable. So of course reform comes with a positive number for subsidies — finding that this number is indeed positive says nothing at all about the impact on the deficit unless you ask whether and how the subsidies are paid for. Ferguson has to know this (unless he’s completely ignorant about the whole subject, which I guess has to be considered as a possibility). But he goes for the cheap shot anyway.

And Char Weise, who should be added to the long list of those wondering why the New York Times continues to publish Casey Mulligan’s wingnuttery.

It’s good for the NY Times to give space to conservatives to present their views on economics to counterbalance Paul Krugman and the other liberals on its payroll. But surely they can do better than Mulligan.

Here Mulligan is misleading his readers. He would like you to believe that the economic theory that the Obama Administration relies on is based on a simple logical error, and that economic analysis tells us that there is no such thing as “stimulus” or the “multiplier”. The truth, however, is that the economic theory behind the Obama Administration’s stimulus proposals is completely conventional, and it is Mulligan who is making a simple logical error.

And so it goes. I often take the time to read the writings of these right-wingnuts, if only to understand what passes for common sense in the midst of the Second Great Depression. But not today. . .

Not surprisingly, given the right-wing policies and causes he’s advocated, I’ve had occasion to refer to and comment on Paul Ryan over the course of the last few years.

Here are some examples:

Starve the beast—and the poor and the elderly—and feed the rich, Gilding the new gilded age, and It’s cheap and easy to screw the poor (on Ryan’s budget plan, the so-called “Path to Prosperity”)

The blame game (on Ryan’s applauding of Standard & Poor’s downgrading of U.S. debt)

Taxing our Galtian overlords (on Ryan’s love affair with Arthur Brooks and Ayn Rand)

Cairo has come out in support of Wisconsin workers and Cairo has come to Wisconsin? (on Ryan’s support of Wisconsin’s Scott Walker)

And, now that he’s Romney’s pick for vice-president, I’m sure there will be more to come. . .

Texas is giving us a real live example of modern right-wing budgetary politics in action: facing a growing fiscal deficit, the legislature and the governor have agree to balance the budget—without raising taxes!

How is that possible? By approving a two-year budget that spends $15 billion less in state and federal dollars than in the last budget cycle (plus a whole host of accounting tricks).

According to the Texas Observer, one effect of the Texas Tea Party budget is to kick the deficit can down the road.

Take a look at the state’s books and you will find a permanent deficit that runs about $5 billion a year. This is the result of a poorly designed scheme in 2006 to swap a property-tax reduction for a business tax that doesn’t generate enough money. Everyone at the Capitol knows about this mess. But no one has the guts—or the sense of responsibility—to deal with it. As a result, the structural deficit has now become as much a part of state government as the Capitol’s pink granite. In 2013—for the fourth session in a row—the state will start its budget process in a $10 billion hole at a minimum.

The other effect is a series of drastic cuts to social programs, especially education. As Andrew Leonard succinctly explains,

Texas schools are in crisis, but the government’s response to a budget shortfall is to cut funding for education even further. It doesn’t take someone with good math SAT scores to figure out what’s going to happen next.

What we’re seeing in Texas is a determined attempt to create a low-tax, business-friendly environment that is making the state look increasingly like its Third World neighbors to the south. Perhaps it’s just their way of returning to their Tejano origins.

Let’s send in the clowns. . .

Who, like Roger Lowenstein, want desperately to spread around the blame for the financial crisis (such as claiming there was equivalent fraud “on the part of mortgage applicants as well as banks”) and to absolve Wall Street of all charges of criminal culpability.

Such as the British Tea Partiers, who couldn’t muster more than 350 people for their “pro-cuts” demonstration.

And Kevin D. Williamson, whose entire case against Terry Eagleton and socialism is that the central planners mistakenly attributed to Marxists don’t have enough information to plan everything (and, by the way, how do you think they do all that planning within giant corporations?).

And, of course, Connecticut Republicans, who aren’t content with a budget that requires unionized state employees to provide $1.6 billion in concessions.

Not to mention the health insurance industry, which is making record profits because people are too poor to use their health insurance.

There are clearly plenty enough clowns to make the entire world into a circus.

Ruling claws

Posted: 9 May 2011 in Uncategorized
Tags: , ,

I don’t hang out with members of the ruling class. But Paul Krugman does, and what he’s hearing with increasing frequency is they blame us for the budget deficits.

The idea is that we got into this mess because voters wanted something for nothing, and weak-minded politicians catered to the electorate’s foolishness.

The fact is, as Krugman recognizes, the current disaster was made by those at the top, not the rest of us at the bottom.

The policies that got us into this mess weren’t responses to public demand. They were, with few exceptions, policies championed by small groups of influential people — in many cases, the same people now lecturing the rest of us on the need to get serious. And by trying to shift the blame to the general populace, elites are ducking some much-needed reflection on their own catastrophic mistakes. . .

These days Americans get constant lectures about the need to reduce the budget deficit. That focus in itself represents distorted priorities, since our immediate concern should be job creation. But suppose we restrict ourselves to talking about the deficit, and ask: What happened to the budget surplus the federal government had in 2000?

The answer is, three main things. First, there were the Bush tax cuts, which added roughly $2 trillion to the national debt over the last decade. Second, there were the wars in Iraq and Afghanistan, which added an additional $1.1 trillion or so. And third was the Great Recession, which led both to a collapse in revenue and to a sharp rise in spending on unemployment insurance and other safety-net programs.

The ruling elite has had their claws in all three causes of the deficit. Unless and until we figure that out, chances are “they’ll do even more damage in the years ahead.”