Eat The Future
Why cut a billion dollars from a highly successful program that provides supplemental nutrition to pregnant mothers, infants, and young children? Why cut $648 million from nuclear nonproliferation activities? (One terrorist nuke, assembled from stray ex-Soviet fissile material, can ruin your whole day.) Why cut $578 million from the I.R.S. enforcement budget? (Letting tax cheats run wild doesn’t exactly serve the cause of deficit reduction.)By PAUL KRUGMAN
NYT
On Friday, House Republicans unveiled their proposal for immediate cuts in federal spending. Uncharacteristically, they failed to accompany the release with a catchy slogan. So I’d like to propose one: Eat the Future.
I’ll explain in a minute. First, let’s talk about the dilemma the G.O.P. faces.
Republican leaders like to claim that the midterms gave them a mandate for sharp cuts in government spending. Some of us believe that the elections were less about spending than they were about persistent high unemployment, but whatever. The key point to understand is that while many voters say that they want lower spending, press the issue a bit further and it turns out that they only want to cut spending on other people.
That’s the lesson from a new survey by the Pew Research Center, in which Americans were asked whether they favored higher or lower spending in a variety of areas. It turns out that they want more, not less, spending on most things, including education and Medicare. They’re evenly divided about spending on aid to the unemployed and — surprise — defense.
(More here.)
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3 Comments:
Welcome to the future Mr. Krugman. How is it that an economist could be surprised that Americans want more, not less of something that is for all practical purposes, "free"? Why would anyone want to stop the fun of putting in a dollar and getting two back? Krugman and his liberal allies refuse to acknowledge the danger presented by a large percentage of the population receiving more from the government than they pay in - the path is not sustainable.
I doubt that the Republicans had the Pew Poll (here is a breakout between Republicans, Democrats and independents), but the proposed cuts seem to follow another GOP talking point … $1.75 Trillion Regulation Tax.
The cuts will impact functions that produce or enforce regulations by cutting funding … which means fewer workers to inspect … such as
National Institute of Standards and Technology -$186M
Food Safety and Inspection Services -$53M
Land and Water Conservation Fund -$348M
EPA Cap and Trade Technical Assistance -$5M
EPA State and Local Air Quality Management -$25M
Clean Water State Revolving Fund -$700M
Drinking Water State Revolving Fund -$250M
Poison Control Centers -$27M
CDC -$755M
NIH -$1B
FDA -$220M
And of course the big targets …
Internal Revenue Service -$593M
EPA -$1.6B
I wrote a commentary on the MN Political Roundtable that the House Republicans who are shouting out “$1.75 Trillion" have selectively emphasized a criticized report to fan the flames of too much government. And these cuts reflect that.
Interestingly, thus far, the announced reductions do not include cuts to Education … and the Pew Poll shows that Republican favor increase funding on Education (45% say increase funding, versus 15% say decrease, with the rest saying keep funding level) … further in helping public schools, the Republicans once again favor additional funding (42% to 25%) … even financial aid for college students was favored by 30% of Republicans. So, thus far, no cuts to Education. That will not please the faction that believes the federal Department of Education should be closed.
Yes, the GOP knows its base … or uses its talking points to influence opinions.
Case in point, in 2009, 15% of Republicans favored cuts in healthcare funding while in 2011, the number jumped to 47% … the “death panels” and other aspects of the mis-information campaign has impacted independent respondents as the 2009 number was 14% but is now at 25% in 2011.
And as Krugman points out the “target” is economic assistance to needy people around the world … the independents barely moved by 1%, while Democrats moved 4%, but the Republicans moved 30% … in 2009, 40% of Republicans said cut this spending … but in 2011, its up to 70%.
But the real budget problem cannot be solved by cutting foreign aid … using FY2008 as a base (which is pre-stimulus …and thus the GOP’s Obama target), About half of fiscal 2008 discretionary spending paid for defense, and most of the rest went for domestic programs such as agricultural subsidies, highway construction, etc. Only 3 percent of discretionary spending funded international activities, such as foreign aid.
We need some realism here.
Mac - the reality check you need is that everything has to be cut from Defense to Ethanol subsidies to Save America's Treasures to Pell Grants to Essential Air Service to AmTrak to Education to Agriculture Price Support payments to Food Stamps to Unemployment to the Nat'l Endowment for the Arts to Corporation For Public Broadcasting to Community Development Fund to US Trade Development Agency to NASA to National Endownment for the Humanities to Freddie Mac and Fannie Mae to all the ones you listed.
We can no longer afford to subsidize with impunity and ignore the consequences. Krugman actually thinks we haven't borrowed enough. The guy is totally loony.
We can't tax anymore. The federal government spends 25% of our national income, yet only collects 14% in tax revenue which means they have to keep borrowing to retain the 25% clip because the economy is flat on its back and tax revenues can't keep up. In 2006 goverment expenditure was 36% of GDP. By 2020 it's going to be 90%.
Raising taxes will only reduce revenues further because raising taxes stifles economic growth and exascerbates the downturn when you have an economy flat on its back which Obama openly admits otherwise he wouldn't have extended the Bush rates at the end of 2010.
We can't borrow anymore because creditors now fear that we won't be able to pay them back and so they're not going to lend us money at 1% or 2% and will demand 10% or 15% interest. Higher interest will devalue the dollar making it harder for creditors to remain faithful to the dollar.
We have tried to print more money and now we are seeing a rise in energy and food prices. Just today it was reported that clothing prices are expected to rise 10$ to 20% by spring. It's clear to anyone not named Paul Krugman that inflation is here now.
It was recently reported that our biggest stimulus package - housing values - have dropped so much that a double dip recession in housing could be confirmed by spring. AS housing values keep falling the Fed is out there buying up more and more mortgage debt in order to keep the values from dropping any further. So the Fed artifically keeps housing prices afloat with subsidies which keeps housing employment higher than it should be meaning the subsidies have to keep coming and coming and coming for fear housing will drop further...but it's going to drop any way. Let's get it over with by letting the market drop shedding the malinvestment so we can come back up.
But, we are against a well here - we can't borrow anymore, we can't tax anymore, we can print any more, and we can't simulate any more. That leaves us only one option - we have to cut trillions of dollars out of the federal budget. There is no other way. And yet, Krugman is one of the biggest deniers of our fiscal straits. Just as President Obama was in total denial over our fiscal situation during the SOTU, so is Krugman completely out to lunch on the realities of the impending govt default.
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