We’re Not Broke — We’ve Been Robbed . . . and here we go again . . . December 13th is the deadline for a budget deal. . . ~J

Published on Wednesday, November 27, 2013 by Other Words
Source: CommonDreams.org

Slashing government spending now is just going to make our nation poorer

by Richard Kirsch

With the Friday the 13th December deadline for a federal budget deal, the cries of “we’re broke,” and “we can’t afford to keep spending,” are ringing again. But we’re not broke and acting like we are is making us poorer.

Attack of the Budget Slashers, an OtherWords cartoon by Khalil Bendib

One of the biggest common misunderstandings is that governments are like households, which need to tighten their spending when times are tough. Actually, governments and households work in opposite ways.

Governments can and should spend more when times are tough. Government spending makes up for lack of spending by families and businesses, and it helps get the economy moving by getting people back to work, putting money in their pockets, and contracting with businesses.

If we needed a reminder of that, the recent government shutdown gave us one. Journalists reported story after story about how business was down, as federal workers were laid off and national parks closed. The estimates are that even though the shut down only lasted 16 days,it cost the economy $24 billion.

We need government spending and investment to get the entire economy moving forward. When families are back at work with decent wages, government tax revenues will rise and spending on social supports will fall. That’s when government can reduce spending without slowing down the economy.

During the past two years we’ve reduced the deficit by half, close to 2008 levels. That may sound like it’s a good thing, but it’s really the biggest reason the economy is so lackluster for the vast majority of Americans with a near-record-high in unemployment, stagnant wages, and a smaller proportion of Americans working than any time in the past 30 years.

We’ve also cut all the wrong things: spending that puts money in people’s pockets today and investments in our economic future. We’ve cut spending on education, unemployment insurance, environmental protection, and scientific research. Our public investment, which includes annual government programs and spending on roads, bridges, transit, research, and development is actually the lowest it’s been as a share of the economy in 60 years.

What if we’d taken a different course during the recession? How about rather than cutting spending after an initial stimulus, which avoided a second great depression by saving three million jobs, the government had kept at it?

History shows that if we have continued the levels of spending normally done after recessions, we would have spent some $800 billion more than we did, and the overall economy (and not just the stock market) would be back to the same level today that it was before the recession hit.

In short, the argument that the government must live within its means to protect our children’s future is backwards. Averting deficit spending now means starving our children’s present and their future. More parents will have to struggle to get by, fewer good jobs will be created, education will suffer, and today’s college students will stumble into their careers saddled with huge debt loads.

And our infrastructure will keep crumbling and research will dwindle, making it harder for our businesses to compete in the global marketplace.

There are ways we can reduce the deficit without slowing down the economy very much, if at all. That is by looking at the other truth about the cry that “we’re broke.” In fact, we have been robbed.

When Uncle Sam gives big corporations tax breaks to move jobs overseas, we’ve been robbed. When Washington taxes billionaires at a lower rate than their secretaries, we’ve been robbed.

To get the country moving again, Congress needs to reverse direction and increase spending on vital services and investment.

That means reversing the budget cuts on domestic spending already in place and stopping any more sequestration cuts on vital services for our families. And raising taxes on the wealthy and huge corporations, which have been gaming the system at our expense.

Instead of obsessing about the “need” to cut government spending, our leaders should be figuring out how best to stimulate the economy to provide both a better today and future for our children.

© 2013 Other Words
Richard Kirsch

Richard Kirsch is a Senior Fellow at the Roosevelt Institute and the author of Fighting for Our Health: The Epic Battle to Make Health Care a Right in the United States, published in February 2012 by the Rockefeller Institute Press. He is also Senior Adviser to USAction and an Institute Fellow at the Rockefeller institute.

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9 Responses to We’re Not Broke — We’ve Been Robbed . . . and here we go again . . . December 13th is the deadline for a budget deal. . . ~J

  1. Rose says:

    We’re not broke, but we are bankrupt.

  2. gdlee says:

    They can just cancel the debt. Some previous presidents have.. It’s legal and lawful. Leave the banksters with the bad paper they created. Wait a minute isn’t it just entries on a balance sheet.

  3. Jiyu Freedom says:

    Yes, I agree with Huggie! The current leaders are not here to make this a better world for all humanity. We need to stop looking for them to lead us. Haven’t we learned yet?! We are the leader!

  4. Jerome Paden says:

    Keynesian vs. standard Von Mises; debt driven vs stable economics through production/creation foundation; banker’s interests and benefit vs the People. Interesting…the thought process seems to be let’s trot out this old horse from a little different direction and maybe it’ll pull the wagon a bit further down the road! If this tripe was just opinion about the latest movie or fashions…who cares, no harm-no foul; but it’s not. It is about keeping a society in-sync with a debt creating, debt driven, banker subservient system which has never and will never serve any other purpose. It is CRIMINAL; it is ANTI-SOCIAL; it is DESIGNED TO SUBDUE THE PEOPLE and therefore – TREASON. But, then, too, gravity does run in reverse in D.C., and we all NEED the bankers/government (same thing, in short) in order to DO anything! Of course!!! Why, you can’t breathe without the Gov’t! What was I thinking???? Audit The FED; Kill the FED!

    • Jean says:

      :) :) :) Hugs, ~Jean

    • Charles Gwin says:

      thank you Jerome…..any way you cut it, debt is debt. Our government spends our money, they have robbed social security(remember that they are not in social security but they have power to rob it), created a feudal system in the U.S. collapsing the middle class and leaving the “citizens” as slaves (sound like Rome….no coincidence, by the way), etc. It appears the only effective way to stop the madness is to have a complete overthrow of our government (federal, at least), cancellation of the “debt” (which is not ours but the banks, corporations, governments, along with the “power elites”), a new constitution that bars lawyers, bankers, and others from holding office, etc. You are right! A good place to start is the removal of the Federal reserve including the world banks that it controls……..

  5. kibitzer3 says:

    Ah. The Rockefeller Institute.

    Says it all, really.

    As for the Roosevelt Institute: Been there, tried that; with FDR drinking from the Keynesian booze, trying to spend the U.S. out of its hole in the ’30s. And the resulting answer that way ended up being – interestingly – war THE great federal job generator.

    Thank you, no thank you. The Keynesian ‘hair of the hound’ ends up being the whole pack, after you in full bay.

    It’s time for something new, anyway. THE something new…which is a whole different subject. This one is old, old, old; with plenty to read to counter Kirsch’s facile argument. Which has some truth. As far as it goes…

  6. Todd says:

    Gee, I wonder if perhaps that is their agenda all along, duh, ya think? It reminds me of the stories of how the mafia used to skim money off the rake in the casinos. They can take it directly through taxes, bailouts, wars, or covertly with Wall Street scams. They make sure that they cut the most important programs that the people count on to survive, which in turn defeats morale, and causes suppression and oppression.

    The good news is that, as huggie says, the game is nearly over, and they know it. Watch the dominoes start to fall, but remind folks to stick together and help each other. It may be another test of our creativity and brotherhood, but we’ll pass this final test with flying colors, for the destiny of humanity is already sealed in Love.

    To all a brilliant holiday season, and hugs Todd.

  7. It is easy just do away with Government they never worked for us anyways. We have to go under and start all over again and we will. There time is over and we will start a new system by the people for the people.They knew this was coming what they did not know is all nations will. That leaves them out in the cold. There ride out is on the way I wish them a good trip.

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