So I wondered when I awoke Thursday morning to news Congress had narrowly avoided crashing the economy by passing a temporary measure to fund our government and raise the debt ceiling. With this news, local TV stations were reporting Senator Charles Grassley had voted against the measure. (Steve King, unsurprisingly, did too.)
What’s up with that, Senator Grassley?
In a search for answers, I checked the Senator’s web site for a statement about his vote. Here’s a portion: “Government spending has exploded since 2008, increasing the national debt by $6 trillion. Obamacare is a drag on the economy and hurting workers' ability to find full-time jobs.”
This is false, or at best, misleading. Let me count the ways.
1. Government spending: A March 2013 article from the Economic Policy Institute titled, “Forget Spending Cuts, the U.S. Economy Really Needs a $2 Trillion Stimulus,” states:
“This economic forecast [CBO 2013-2023] showcases the results of the misguided framing and resolution of the ‘fiscal cliff’ debate and the more recent sequestration fight. Near-term deficit reduction intrinsically works against restoring full employment, and obsessing with medium- to long-term deficit reduction diverts policymakers’ focus from the jobs crisis at hand.”
2. National debt: In an April 2013 post entitled “Policy Basics: Deficits, Debt & Interest,” the Center on Budget and Policy Priorities noted: “Raising the debt limit does not directly alter the amount of federal borrowing or spending going forward. Rather, it allows the government to pay for spending on programs and services that Congress has already approved. Nor is the need to raise the debt limit a reliable indicator of the soundness of budget policy.”
3. As I’ve outlined in recent columns, the Affordable Care Act, aka Obamacare, is funded mostly by cost savings and new revenue outside the appropriations process. Again, see Sarah Kliff’s post at Wonkblog on Aug. 30, 2012. Additionally, rather than creating a drag on the economy, the regulations under ACA will help control health care costs and thus help the economy grow long term.
4. Obamacare does not limit workers’ ability to find full-time jobs. Again, the Center on Budget and Policy Priorities debunks this claim in a report posted earlier this month, stating in one subhead: “Data Don’t Support Claim of Big Shift to Part-Time Work. Instead the report points out: “The fact is, it’s too early to know how health reform will ultimately affect the amount of part-time work. But there’s every reason to expect the impact to be small as a share of total employment.”
Daily Kos diarist Mets102 wrote about voting for default in a post entitled, “162 Republicans to America and World: Drop Dead.” The post explained: “The global economic system is based upon the premise that the debt of the United States Government is, for all intents and purposes, a riskless investment. To call that premise into question is upend the global economy. Overnight, stock markets across the globe would crash. The retirement savings of tens of millions of Americans would begin to disappear, whether those savings are from 401k's and like vehicles or from defined pension plans. . . . The results that would flow from default would be catastrophic.”
Catastrophe – that’s what Senator Charles Grassley and Representative Steve King voted for. Not to stabilize the economy, protect the nation or help their constituents. They voted for the Tea Party.
Time to quit drinking the tea.
Showing posts with label budget. Show all posts
Showing posts with label budget. Show all posts
Monday, November 18, 2013
Wednesday, May 2, 2012
What about that deficit?
I’ve heard a lot about the deficit and our national debt the last five years. And I’m tired of people trotting out the canard about how irresponsible we’d be if we “ran our household budget like the government budget.” Even President Obama has made this terrible comparison. It’s apples to oranges, to use another cliché.
First and foremost, do we get to print money and set interest rates? I think not. Yet our government can do these things to respond to economic conditions.
Second, how many of us can make it through life without acquiring debt to pay for an education, automobile or house? I congratulate you if you have the resources to simply write a check. But for most of us, this type of debt is reasonable and manageable if we are employed and sensible with our dollars.
But government debt is a completely different beast because government controls monetary policy and government spending is actually independent of government debt. Counterintuitive, isn’t it?
Next, look at history. Deficits simply reflect current economic activity. Because our economy is depressed, our deficit is larger. When economic activity increases, we’ll see the deficit drop.
How to increase economic activity? Well, employing people would help, but we’ve not seen our “job creators” pony up money to expand and hire. Instead, they’re hoarding their money or investing elsewhere.
History shows that in situations like the present, government spending to support people via employment and social programs helps get the economy going. Of course in the 30s, direct employment programs were also effective. And for all you folks who believe World War II, and not FDR’s social programs, ended the Depression, I’d note the war created government spending -- just on the war effort.
Right now Europe is tumbling into a double-dip recession because in their single-minded focus on debt, they have cut spending to the bone. Austerity rules, and it’s creating instability, not growth.
America, particularly our Congress, needs to take note. To keep our economy moving, government is the only entity large enough to take appropriate action.
And as Robert Greenstein of the Center for Budget and Policy Priorities notes, stabilizing our economy involves other factors, most notably rising health care costs. “In the long run, the single largest contribution to deficit reduction will need to come from slowing the rate of growth of health care costs throughout the U.S. health care system, in the public and private sectors alike. A slower rate of health care cost growth will produce substantial budgetary savings in areas ranging from Medicare and Medicaid to the tax exclusion for employer-based health coverage,” he writes.
So the whole thing is complicated and simple sound-bite solutions like a balanced budget amendment or cutting social programs or cutting taxes won’t work.
Develop a better understanding of government debt and the deficit by reading -- instead of listening to TV talking heads.
Start with “Deficit Dogma Debunked” by Marshall Auerback at: http://www.salon.com/2012/04/19/deficit_dogma_debunked/. Then dig deeper with Greenstein’s article, “A Framework for Deficit Reduction: Principles and Cautions” at: http://www.cbpp.org/cms/index.cfm?fa=view&id=3435.
First and foremost, do we get to print money and set interest rates? I think not. Yet our government can do these things to respond to economic conditions.
Second, how many of us can make it through life without acquiring debt to pay for an education, automobile or house? I congratulate you if you have the resources to simply write a check. But for most of us, this type of debt is reasonable and manageable if we are employed and sensible with our dollars.
But government debt is a completely different beast because government controls monetary policy and government spending is actually independent of government debt. Counterintuitive, isn’t it?
Next, look at history. Deficits simply reflect current economic activity. Because our economy is depressed, our deficit is larger. When economic activity increases, we’ll see the deficit drop.
How to increase economic activity? Well, employing people would help, but we’ve not seen our “job creators” pony up money to expand and hire. Instead, they’re hoarding their money or investing elsewhere.
History shows that in situations like the present, government spending to support people via employment and social programs helps get the economy going. Of course in the 30s, direct employment programs were also effective. And for all you folks who believe World War II, and not FDR’s social programs, ended the Depression, I’d note the war created government spending -- just on the war effort.
Right now Europe is tumbling into a double-dip recession because in their single-minded focus on debt, they have cut spending to the bone. Austerity rules, and it’s creating instability, not growth.
America, particularly our Congress, needs to take note. To keep our economy moving, government is the only entity large enough to take appropriate action.
And as Robert Greenstein of the Center for Budget and Policy Priorities notes, stabilizing our economy involves other factors, most notably rising health care costs. “In the long run, the single largest contribution to deficit reduction will need to come from slowing the rate of growth of health care costs throughout the U.S. health care system, in the public and private sectors alike. A slower rate of health care cost growth will produce substantial budgetary savings in areas ranging from Medicare and Medicaid to the tax exclusion for employer-based health coverage,” he writes.
So the whole thing is complicated and simple sound-bite solutions like a balanced budget amendment or cutting social programs or cutting taxes won’t work.
Develop a better understanding of government debt and the deficit by reading -- instead of listening to TV talking heads.
Start with “Deficit Dogma Debunked” by Marshall Auerback at: http://www.salon.com/2012/04/19/deficit_dogma_debunked/. Then dig deeper with Greenstein’s article, “A Framework for Deficit Reduction: Principles and Cautions” at: http://www.cbpp.org/cms/index.cfm?fa=view&id=3435.
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