Surprise! GOP Budget Busting Could Seriously Hurt Economic Growth

[King]

Look, discretionary spending cuts are not only NOT going to balance the budget, but actually cuts money from programs that are usually less wasteful and better managed than non-discretionary parts of the budget.  

They aren't political suicide because they are all so small that it requires journalists to label the cutting of 100 programs for about $500 mil a piece to read as "$50 bil in budget cuts."  If Americans actually saw what was being cut, they'd protest most of it like they do with the big three entitlements (Defense, Medicare, Social Security).  Voters love "$50 bil in budget cuts," they hate cuts to the National Weather Service and Department of Transportation.

The Republicans are purposefully chasing red herrings here to win political gains.  If anything, what has been proposed for removal is actually the part of government that should stay: regulatory agencies that allow the government to help the private sector achieve common goals without "socialist takeovers."  

When they are ready to start closing unnecessary bases and camps in their home districts and curtail subsides for big agriculture and oil companies that fund their campaigns, then maybe I'll commend them on their work.

[exopolitician]

@Torie, GOP propaganda notwithstanding, private business investment (a.k.a., risk-taking, betting on the future) is actually up nicely. The economy is sluggish for other more obvious reasons. Occam's razor.

Then why is Obama bitching that corporations have trillions of dollars in cash sitting in the bank that they won't invest, and he is jawboning them to do so?

This discussion is depressing me. I need to get away from the computer, get baked, and think about more important things, like sex. Have a good evening.

The main problem is that you seem to think political stunts employed by the GOP are just what will get these people to invest all that money.

If I were a business owner, I'd be scared sh**tless to invest one bloody cent with the likes of John Boehner and the teabaggers at the helm.  Their goal isn't to make the U.S. "business friendly"... but to make it "friendly to large corporations that bankroll our campaigns while destroying the social safety net".

As for your comments on Lief:  When the top marginal income tax rate is back at a more reasonable 60% with similarly high rates on excessive capital gains and we still have a major financial problem.. then we can talk entitlement cuts for people who rely on them to live past the age of 65.

The difference between Democrats and Republicans is that Democrats want people to live long, fruitful lives and spend their golden years with some dignity and adequate medical care and income.  The Republicans would have them die younger than their parents did in order to protect insanely irresponsibly low tax rates for the robber barons of today.

Also, your elitist smug attitude of late has really left a bad taste in my mouth.  I want to know the logic of turning off grandma's heat AND reducing the ability of meteorologists to forecast deadly cold... when it does nothing to put a dent in the deficit, but scores political points for teabaggers.

How am I the irrational, foolhardy, begging-for-the-end-of-all-that-is-good bleeding heart and you the logical, rational, level headed thinker because I believe those that could pay to heat thousands of homes and employ an office full of weathermen should pay a higher share... rather than leaving countless vulnerable people out in the cold?

How, exactly, is that irrational?  Logic, in this case, it would seem, would call for a little redistribution of wealth so people aren't freezing to death.

But again... your "fix" for decreasing unemployment, creating jobs, and getting the economy going is to put thousands out of work and remove tens of billions of dollars from the economy... so I rest my case.

Amen brutha.

[krazen1211]

The first place to really start would be the corporate welfare program for the nursing home industry known as Medicaid, cutting $100 billion or so would return us to mid 2000s levels.

[Brittain33]

Ya, and so far, what has massive spending done for us, except keep those public employees employed at their current inflated compensation packages?  Two thirds of the stimulus money went straight to public employees, and another slug went to unemployed folks disincentivising them to seek work. In any event, the issue is moot. There will be a little experiment here. Whether the cuts are deep enough to make much difference remains to be seen. But until the path out of the entitlement wilderness is cleared, I don't expect much but very sluggish growth. Folks are down on America, and for good reason. They just don't want to invest, and take risk. The government has made it too risky to do that.

We've been through this before. When unemployment is 10%, laying off hundreds of thousands of teachers, the need for whose skills doesn't track with the economy, would push unemployment higher and cut off the multiplier effect of their salaries on the private sector. Note that when the teachers in Wisconsin have been willing to accept massive pay cuts, that hasn't been considered enough, so talking about maintaining inflated pay is disconnected from what's going on in reality. The purpose of the stimulus was to stimulate the economy, not to leverage a crisis to layer a wrenching adjustment affecting teachers on top of the difficult adjustment hitting manufacturing and construction. You're arguing that an economic crisis called for solutions making the crisis worse in the interests of advancing conservative causes. Which is a certain viewpoint, but it's not what America voted for in 2008.

Besides, can you cite the number saying 2/3 of stimulus money went straight to public employees? Wasn't at least 1/3 in the form of tax cuts via payroll taxes? Also, if the public employees are teaching the children of private sector employees, paving roads for them, driving buses for them, and patrolling their streets, is it honest to argue that the benefit of stimulus payment accrues solely to people who draw a paycheck?

[Brittain33]

Lief you seem to think the tooth fairy gave you a quarter when you lost a tooth as a kid. She didn't.

The government can create wealth by creating money, up to a point.

If you have lots of people idle, that is a loss to the economy. We are losing the value of their labor and no benefit is drawn from that. If an increased money supply puts more people to work, we gain the value of their labor. That is a plus if their labor is constructive in any way and isn't just put to make-work projects with no value, as in the Soviet Union building canals across the frozen north or people building weapons that sit in arsenals and are never used, oops, I guess we're doing that anyway.

You seem to think that paying teachers to do their jobs is a dead loss to the economy, that there is no drawback to closing schools and shuttling kids into larger classrooms, the only loss is to the person who draws the paycheck. Ok, let's stipulate that--that government services have no value to people who receive them, only to the people who are paid to carry them out, that we can wear down our roads as they are now and give kids iPads to learn from donated by parents. What about the money that those employees spend in the private sector?

[Brittain33]

@Torie, GOP propaganda notwithstanding, private business investment (a.k.a., risk-taking, betting on the future) is actually up nicely. The economy is sluggish for other more obvious reasons. Occam's razor.

Then why is Obama bitching that corporations have trillions of dollars in cash sitting in the bank that they won't invest, and he is jawboning them to do so?

This discussion is depressing me. I need to get away from the computer, get baked, and think about more important things, like sex. Have a good evening.

The main problem is that you seem to think political stunts employed by the GOP are just what will get these people to invest all that money.

If I were a business owner, I'd be scared sh**tless to invest one bloody cent with the likes of John Boehner and the teabaggers at the helm.  Their goal isn't to make the U.S. "business friendly"... but to make it "friendly to large corporations that bankroll our campaigns while destroying the social safety net".

As for your comments on Lief:  When the top marginal income tax rate is back at a more reasonable 60% with similarly high rates on excessive capital gains and we still have a major financial problem.. then we can talk entitlement cuts for people who rely on them to live past the age of 65.

The difference between Democrats and Republicans is that Democrats want people to live long, fruitful lives and spend their golden years with some dignity and adequate medical care and income.  The Republicans would have them die younger than their parents did in order to protect insanely irresponsibly low tax rates for the robber barons of today.

Also, your elitist smug attitude of late has really left a bad taste in my mouth.  I want to know the logic of turning off grandma's heat AND reducing the ability of meteorologists to forecast deadly cold... when it does nothing to put a dent in the deficit, but scores political points for teabaggers.

How am I the irrational, foolhardy, begging-for-the-end-of-all-that-is-good bleeding heart and you the logical, rational, level headed thinker because I believe those that could pay to heat thousands of homes and employ an office full of weathermen should pay a higher share... rather than leaving countless vulnerable people out in the cold?

How, exactly, is that irrational?  Logic, in this case, it would seem, would call for a little redistribution of wealth so people aren't freezing to death.

But again... your "fix" for decreasing unemployment, creating jobs, and getting the economy going is to put thousands out of work and remove tens of billions of dollars from the economy... so I rest my case.

Amen brutha.

Sing it. Some of these "tough truths" don't stand up.

[Brittain33]

http://news.yahoo.com/s/ap/20110225/ap_on_bi_go_ec_fi/us_economy

You must be logged in to read this quote.

This is the point people are making--laying off hundreds of thousands of public employees, as has been done, is the opposite of stimulus.

[opebo]

Folks are down on America, and for good reason. They just don't want to invest, and take risk. The government has made it too risky to do that.

You're completely deluded, Torie.  They don't want to invest because they can pay a wage 1/20th as high somewhere else.  The issues you are talking about don't have any effect at all.

If you want america to 'succeed' on the capitalist terms you prefer, we'll need to get the wage down to about $2-3/hour, and houses need to be worth about $25,000-50,000.  We'll also need a lot more prisons and armed guards.

[krazen1211]

Here's some really great data on the aggregate growth of the government education industry.

http://nces.ed.gov/programs/digest/2009menu_tables.asp

http://nces.ed.gov/programs/digest/d09/tables/dt09_180.asp




Some things, such as the tripling of expenses for school construction, and the tripling of expenses for employee benefits, particularly jump off the page. Food Services, on the other hand, hasn't grown quite as much.

[courts]

Who the hell would make the cuts you describe as a "political stunt"?

Cuts that would balanced the budget and help the US economy long term are political suicide.  The cuts the GOP is proposing are political stunts.

There's a clear difference.

True for now but I think anyone who doesn't think something like say, social security isn't going to be on the cutting board soon isn't really paying attention. Obama agreeing to payroll tax cuts and the comments the party made after wards pretty much cleared up any doubts there IMO. Of course even raising the retirement age to after you die wouldn't be enough at this point.

[Torie]

You must be logged in to read this quote.

Color me confused Snow as to why you think I favor either of those things. Don't you remember me smash mouthing Santorum for wanting to privatize the national weather service? And where have I written that I favor cutting social security benefits other than on a means tested basis (other than perhaps tying benefits to the CPI rather than wage increases)?

I am happy to defend what I actually believe, but it is difficult for me to defend that which I do not.

[Torie]

Ya, and so far, what has massive spending done for us, except keep those public employees employed at their current inflated compensation packages?  Two thirds of the stimulus money went straight to public employees, and another slug went to unemployed folks disincentivising them to seek work. In any event, the issue is moot. There will be a little experiment here. Whether the cuts are deep enough to make much difference remains to be seen. But until the path out of the entitlement wilderness is cleared, I don't expect much but very sluggish growth. Folks are down on America, and for good reason. They just don't want to invest, and take risk. The government has made it too risky to do that.

We've been through this before. When unemployment is 10%, laying off hundreds of thousands of teachers, the need for whose skills doesn't track with the economy, would push unemployment higher and cut off the multiplier effect of their salaries on the private sector. Note that when the teachers in Wisconsin have been willing to accept massive pay cuts, that hasn't been considered enough, so talking about maintaining inflated pay is disconnected from what's going on in reality. The purpose of the stimulus was to stimulate the economy, not to leverage a crisis to layer a wrenching adjustment affecting teachers on top of the difficult adjustment hitting manufacturing and construction. You're arguing that an economic crisis called for solutions making the crisis worse in the interests of advancing conservative causes. Which is a certain viewpoint, but it's not what America voted for in 2008.

Besides, can you cite the number saying 2/3 of stimulus money went straight to public employees? Wasn't at least 1/3 in the form of tax cuts via payroll taxes? Also, if the public employees are teaching the children of private sector employees, paving roads for them, driving buses for them, and patrolling their streets, is it honest to argue that the benefit of stimulus payment accrues solely to people who draw a paycheck?

The 2/3 number was what I learned somewhere, but I can't recall where now. If I am wrong, and the figure is lower, so be it. And where did I say I wanted to fire thousands of teachers?  What I would like to do is pay them market, and fire the incompetents, and hire competents, and in fact increase the pay of competents. I have posted that repeatedly - just as I have posted that I want to pay more for inner city education, if it is attended by critically needed reforms.

Where I am a hardass is on medical subsidies. I want to ration, based on cost, age, and efficacy. I have also posted reforms that I think would make the delivery of such services more efficient, and have consumers more effectively police prices, and get the US consumers out of the business of subsidizing drug research for the planet.

It is better to focus on what a poster actually believes, rather than a caricature of what they believe (not that you are particularly guilty of that usually Brittain33, but Snow I think jumped the shark a bit IMO). That is just intellectually lazy in my opinion. Caio.

[Bull Moose Base]

More than a third of stimulus was tax cuts.  GOP refers to it all as spending and should thus refer to the tax cuts they fight to give millionaires as spending too.

[Brittain33]

The 2/3 number was what I learned somewhere, but I can't recall where now. If I am wrong, and the figure is lower, so be it. And where did I say I wanted to fire thousands of teachers?  What I would like to do is pay them market, and fire the incompetents, and hire competents, and in fact increase the pay of competents. I have posted that repeatedly - just as I have posted that I want to pay more for inner city education, if it is attended by critically needed reforms.

That's your ambition if you could remake policy. You're talking now in terms of opposing the stimulus, a big part of which involved aid to the states which, if they had to cut their budgets dramatically in 2009 the way they're doing now, would have done so through laying off thousands of teachers the way Texas is doing now. At best, you'd have a situation like Wisconsin has, where teachers volunteer big pay cuts. But what you wouldn't get is a reconfiguring of how schools are staffed, not when the issue at stake is whether a state has a 15% budget deficit or only 3% once stimulus funds are in play.

When you attack the stimulus for channeling money to state employees, what you're talking about is layoffs and shuttered schools, because that's what could get done. In fact, even if the states had seized the opportunity to abolish tenure and find some metric for measuring teacher value and firing bad ones, you wouldn't be hiring good ones in their place, and likely would be firing some decent ones, all to make the budgets pencil out with Great Recession revenues where states can't borrow.

[Sam Spade]

@Torie, GOP propaganda notwithstanding, private business investment (a.k.a., risk-taking, betting on the future) is actually up nicely. The economy is sluggish for other more obvious reasons. Occam's razor.

Then why is Obama bitching that corporations have trillions of dollars in cash sitting in the bank that they won't invest, and he is jawboning them to do so?

Just as an FYI, the amount of corporate debt out there is far, far greater than the amount cash sitting locked away - in fact, they are far too leveraged.  This, in effect, is one of the reasons why corporations are holding onto their cash.  You see, much of this debt has been bought at very low interest rates and willing investors.  If interest rates were to rise (and they will - that is one obvious guarantee, they are certainly not going lower, even in the corporate debt market) or lending would tighten, or margins would tighten, or, I could list a whole lot of variables that most people in the corporate realm suspect will occur, actually do happen, then the corporations will have to use that "locked-up cash" to roll over their debt.  Otherwise, they get f-ed.

[Torie]

The 2/3 number was what I learned somewhere, but I can't recall where now. If I am wrong, and the figure is lower, so be it. And where did I say I wanted to fire thousands of teachers?  What I would like to do is pay them market, and fire the incompetents, and hire competents, and in fact increase the pay of competents. I have posted that repeatedly - just as I have posted that I want to pay more for inner city education, if it is attended by critically needed reforms.

That's your ambition if you could remake policy. You're talking now in terms of opposing the stimulus, a big part of which involved aid to the states which, if they had to cut their budgets dramatically in 2009 the way they're doing now, would have done so through laying off thousands of teachers the way Texas is doing now. At best, you'd have a situation like Wisconsin has, where teachers volunteer big pay cuts. But what you wouldn't get is a reconfiguring of how schools are staffed, not when the issue at stake is whether a state has a 15% budget deficit or only 3% once stimulus funds are in play.

When you attack the stimulus for channeling money to state employees, what you're talking about is layoffs and shuttered schools, because that's what could get done. In fact, even if the states had seized the opportunity to abolish tenure and find some metric for measuring teacher value and firing bad ones, you wouldn't be hiring good ones in their place, and likely would be firing some decent ones, all to make the budgets pencil out with Great Recession revenues where states can't borrow.

Fair point, and teachers are not a group I would focus on laying off. I would start with prison guards, and then move on to "fire fighters."  But I guess your theory will be tested, since the feds won't be sending any more money to the states. That door is shut. We shall see what happens, and whether or not tens of thousands of teachers are laid off, and class sizes balloon (not that that has much to do with educational quality, but I digress).

[Brittain33]

Any time you say that Obama's stimulus bill was a big payoff to his supporters, we're going to have this argument.

[exopolitician]

You must be logged in to read this quote.

http://www.politico.com/news/stories/0211/50197.html



I'm curious to know what "local economic initiatives" they are talking about.

[opebo]

Here's some really great data on the aggregate growth of the government education industry.

http://nces.ed.gov/programs/digest/2009menu_tables.asp

http://nces.ed.gov/programs/digest/d09/tables/dt09_180.asp

Some things, such as the tripling of expenses for school construction, and the tripling of expenses for employee benefits, particularly jump off the page. Food Services, on the other hand, hasn't grown quite as much.

So you want deflation?  You don't want economic growth?

[Lief 🗽]

Lief you seem to think the tooth fairy gave you a quarter when you lost a tooth as a kid. She didn't. And the idea that we can dig our way out of this hole without substantive pain, is just a redux of your tooth fairy moment. It really is. Nobody for example, nobody, not even the most liberal Dem, on the deficit commission, believes remotely what you do - nobody. Nor do most economist of all political persuasions, or the Obama administration itself. As I said, next to nobody.

Torie, you're free to believe in whatever right-wing fantasy world, where the only way to solve the debt problem is to kill millions of poor and old people, you want, but there's really no need to be so hostile that others don't share your fantasies. And I really couldn't care less what most people on the deficit commission think; most people on that deficit commission are responsible for the mess we're currently in.

[krazen1211]

Here's some really great data on the aggregate growth of the government education industry.

http://nces.ed.gov/programs/digest/2009menu_tables.asp

http://nces.ed.gov/programs/digest/d09/tables/dt09_180.asp

Some things, such as the tripling of expenses for school construction, and the tripling of expenses for employee benefits, particularly jump off the page. Food Services, on the other hand, hasn't grown quite as much.

So you want deflation?  You don't want economic growth?

Nope, yep. But overpaying so much for the bloated government education industry doesn't result in economic growth. Rather, providing so much money to these special interests takes away money from useful things.

[Southern Senator North Carolina Yankee]

The first place to really start would be the corporate welfare program for the nursing home industry known as Medicaid, cutting $100 billion or so would return us to mid 2000s levels.

While its nice to say "this is the first place we should cut" the realities of the process often get in the way of that. The only thing they can do right now is play with discretionary spending levels. In March and April when the House writes its budget we will either see real reforms in entitlements or Paul Ryan will be finished. The promises he made today were concrete to the point of putting himself into a corner. This will happen.

And when it does, I eagerly await the hypocrisy of the Democrats when they inevitably claim the GOP is wanting to feed the seniors dog food, which will happen regardless of content. The reason is because you have the delusional hacks like Harry Reid and some people on this forum who think there isn't an entitlement problem, and you got the political whores who care only for the horse race and will insist on using such rhetoric as "part of the game of Washington" which is despicable.

I keep seeing this talking point of the GOP doing this to avoid real cuts, but this arguement rings hollow. Not only because its a strategery aimed at ginning up Tea Party revolt but also because the only thing up for consideration right now is discretionary spending for the remainder of this current fiscal year largely because the Democrats punted prior to the election just like the GOP did in the 109th (Change we can beleive in?). The arguement of this being a gimmick or a stunt is based only on cynicism and bias. The real measure of trickery on the part of this GOP congress will come when they propose there real budget for next fiscal year in April, and if they dodge on entitlements, defense and the like, then an arguement can be made of them being irresponsible or playing political games. I find it especially hilarious that Obama basically did the same thing with his damn budget (a stunt essentially) not two or three weeks ago and yet no one cares. Only the Republicans can do wrong here because they dared challenge Obama. I'll file this under the heading, "Boehner screwed from birth mantra" and the "Horserace Horsesh..."  file.  

[Sbane]

Who the hell would make the cuts you describe as a "political stunt"?

Cuts that would balanced the budget and help the US economy long term are political suicide.  The cuts the GOP is proposing are political stunts.

There's a clear difference.

This is just ridiculous. Look at what they are cutting and then you tell me how it is less damaging politically to cut them then something else. A stunt implies strategery for political benefit and this is hardly beneficial politically at all. Obama's budget was a far safer political route, which makes sense when you consider just how much it is degenerate trash.

What the hell are "Cuts that would balance the budget and help the economy long term"? 

They are cutting heating oil for the poor and cutting funding to planned parenthood, even though none of the money goes to abortion. And don't even bring up fixed costs. Does the government pay all of the fixed costs of the facility, or only the portion required for the other services the clinics provide? If abortions are indeed profitable, the fixed costs are also being paid for.

Anyways I digress. While these cuts are being made (miniscule and targetting Democratic constituents), the army will still be able to advertise at Nascar. That's what the army needs, more name recognition.

And considering the fact they don't even try to take on entitlement spending, I would tend to think this is just a political stunt, instead of a real solution. Not like Obama has proposed anything either, but the Republicans certainly aren't better. Actually they are just more hackish than Obama, that's all.

[Sbane]

The first place to really start would be the corporate welfare program for the nursing home industry known as Medicaid, cutting $100 billion or so would return us to mid 2000s levels.

No, let's cut from medicare first.

[Sbane]

http://news.yahoo.com/s/ap/20110225/ap_on_bi_go_ec_fi/us_economy

You must be logged in to read this quote.

This is the point people are making--laying off hundreds of thousands of public employees, as has been done, is the opposite of stimulus.

Look, there is a tradeoff between GDP growth and the deficit. We do need to cut the deficit, and that will lead to slower economic growth. Hell, we might be seeing that in the UK right now. It might be what is necessary though, but hopefully Republicans are honest about it.