Monday, February 28, 2011

Gov't Spending Equals American Jobs, pt. 2

A blogger at Moody's Analytics notes that if Congressional Republicans get the cuts they want, out economy will suffer a grevious hit. Their proposal, he writes, "would reduce 2011 real GDP growth by 0.5% and 2012 growth by 0.2 percentage points This would mean some 400,000 fewer jobs created by the end of 2011 and 700,000 fewer jobs by the end of 2012."

Talking Points Memo also notes that an ABC News report last week predicted that the Republican approach would cut economic growth by 2 percent of GDP--an even more dire analysis than Moody's.

I keep hearing from my conservative friends that if we raise taxes, it will hurt job creation. But that's really a hypothetical. Job creation is driven by many things, and maybe taxes play a role, but demand, business climate, workforce conditions, all of those play a role as well. Cutting government spending will destroy jobs that families are depending on Right Now. Real jobs, not possible jobs. With cutting government spending, you are certain to do one of several things: cancel someone's health insurance, reduce someone's services, cut someone's job. These are not good outcomes.

Friday, February 25, 2011

Government Spending Equals American Jobs

The ongoing protests in Madison have me thinking about what government spends money on. And in many cases, it's employing people like teachers, policemen, firemen, social workers, etc.

So what happens when we cut government spending?

The math isn't difficult.

More people on unemployment (and more government spending). Fewer taxes collected. Less money going into the retail sector. Purchasing decisions (new house, new car, new teeth) delayed or canceled.

That's good for our economy how?

I understand the argument that government is spending too much, and I'm sure there are cases where it's true. But too often this argument is framed this way: "We have to cut government spending so we can create jobs!" But that's not what happens at all. You may be saving the taxpayer some dollars. But what you're also doing is cutting jobs, and there's no reason whatsoever to think that the private sector will pick up the slack.

Right now many states are facing big deficits. A good number of these states, like Wisconsin, have Republican governors. So raising taxes is out. Cutting spending is in. And that means job losses, less revenue, and so on. It does not sound like a formula for economic recovery to me.

Tuesday, February 22, 2011

What If…?


I’d like to conduct a mental exercise. Let’s pretend the United States had a democratically-elected president back in 2000.


If that had happened, I think today’s headlines would not just be about Egypt and Libya and Bahrain. I think today, or maybe tomorrow or next week, we would be hearing about the overthrow of Saddam Hussein, as Iraq joins the irresistible lurch toward democracy in the Middle East.


Those who sought to justify the war in Iraq trotted out one reason after another. The terrorists who attacked us on 9/11 didn’t come from Iraq, so we heard about weapons of mass destruction. The weapons of mass destruction turned out not to exist, so we heard about democracy and the need to rid the world of this evil dictator.


But as it turns out, time might have done the trick, much more neatly and legitimately. It doesn’t take much imagination to think about a unified Iraq, whose citizens suddenly find themselves with fewer reasons to fight, now that they have worked together to rid themselves of a tyrant.


And think what could have been saved. Thousands of American lives. Hundreds of thousands of Iraqi lives—to say nothing of the refugee problem that afflicts Iraq's neighbors. Trillions of dollars that we still haven’t figured out a way to replace. The reputation of this country as a champion of democracy.


Maybe, right? Maybe it would’ve worked out that way. All we know now, as we stand on the sidelines, is that our slipshod, democracy-at-the-barrel-of-gun solution in Iraq now looks shaky, out-of-touch, and overly expensive. Maybe it will work out. Maybe.

Compare and Contrast

Two neighboring states have elected starkly different governors with starkly different ideas of how to solve their financial crises.


In Wisconsin, Scott Walker is charging ahead with tax cuts, evisceration of public unions, and a government-is-the-problem vision that is as pure, and as radical, as any state executive has articulated in modern times.


Facing a deficit twice as large, Minnesota governor Mark Dayton is similarly taking a blowtorch to government spending, but he is almost unique among governors in asking that the rich also pay a hefty price tag to address financial problems that have been ignored for too long.


Walker’s agenda will almost certainly pass in some form. It’s hard to see how Dayton’s tax increases will get by the new Republican majorities in the Minnesota Legislature.


It’s too bad. We might’ve had a chance to see how two opposite approaches would play out. Would wealthy business owners have stampeded out of Minnesota for the greener pastures of Wisconsin, taking their jobs with them? Would Walker’s gutting of schools and presumably health care programs (if you want to address spending you gotta go there eventually) have made Wisconsin an undesirable destination for employers?


It’s too early to tell how it will all play out. But the two men could hardly be further apart in their ideas about what their states should look like.

A random thought

(That I’ve shared elsewhere…)


As a parent, there is one thing I’m quite sure of.


Public school teachers deserve more compensation, not less.