American Austerity: Why the States Cutting Spending Are Doing Worse
Last edited Fri Jun 22, 2012, 12:42 PM - Edit history (2)
It's not working on that side of the Atlantic. And it's not working over here, either.
Austérité isn't just for the Europeans. In November 2010, Republicans running on an anti-stimulus platform crushed Democrats in Washington and across the country and promised to start slashing spending to unlock growth.
How's that going? Adam Hersh compares the 20 states have cut public spending with the 30 states that have expanded spending. Here's his upshot graph (note that the metric is group median):
http://www.theatlantic.com/business/archive/2012/06/american-austerity-why-the-states-cutting-spending-are-doing-worse/258825/
Austerity Is Hammering State Economies
States that Cut Spending in Response to the Recession Fare Worse Economically
http://www.americanprogress.org/issues/2012/06/austerity.html
In Europe, Consumption Gap Widens
http://online.wsj.com/article/SB10001424052702304898704577478222819697832.html?mod=e2tw
marmar
(77,097 posts)nt
mikekohr
(2,312 posts)oh wait. Never mind.
sad sally
(2,627 posts)It is clear we must enter an era of austerity, said Nancy Pelosi last July when she agreed to support Senate Majority Leader Harry Reids budget proposal for deep spending cuts and no tax increases...
Tigress DEM
(7,887 posts)It resonates on a common sense level that is decieving. There is a difference between honestly spending conservatively and taking money away from programs that work just to make the numbers look good.
It's kind of like individuals not paying their bills because they don't have money creates more problems than it solves.
The work of government is to support "We the people" while we go about the business of creating the "GNP". No support, no "GNP". Keep that up and wees'a be flat broke.
Tig
Bill USA
(6,436 posts)maybe some people will "get it".
RECOMMENDED!
XanaDUer
(12,939 posts)is there a simple link to which states are cutting and which are expanding? I'd really like to just see that part.
Thanks in advance!
MindMover
(5,016 posts)but here is some information about data sources....
Data sources:
State spending cuts: National Association of State Budget Offices, State Expenditures Survey, various years. Includes all expenditures less federal transfers. Adjusted for inflation using U.S. Bureau of Economic Analysis, GDP price deflator, National Income and Product Accounts Table 1.1.4.
Unemployment rates: U.S. Bureau of Labor Statistics, Current Population Survey, multiple years.
Private employment: U.S. Bureau of Labor Statistics, Current Establishment Survey, multiple years.
Real state gross domestic product: U.S. Bureau of Economic Analysis, Regional Data, GDP & Personal Income Accounts, multiple years.
XanaDUer
(12,939 posts)Cheers
I have a feeling Georgia is one of the "cutter" states- that place is falling apart.
mmonk
(52,589 posts)that pays the lawmaker well.
JayhawkSD
(3,163 posts)Those states are not doing badly because they are cutting spending.
Those states are cutting spending because they are doing badly.
Unlike the federal government, a state cannot spend money that it does not have.
Other states are not doing better because they are spending more.
They are cutting less because they are not doing as badly.
MindMover
(5,016 posts)syberlion
(136 posts)This is because even during bad times, they're still making money. It's a skewed view of economics because they don't understand economics in the first place. The majority of these supply-side, austerity people were born half-way between third base and home plate, so of course they believe the supply is always there and is there for everyone.
It is the same with this austerity mentality. When their money isn't making as much as they think it should, they shift their spending to balance out their over-all yield. So, on a personal level, austerity gives them a positive outcome. The problem is they are operating from the supply-side of the fence. They have plenty in reserve so shaving a few dollars here and there isn't hurting them personally. They can still jet to one of their multiple houses, visit their money in the Cayman islands, or run for federal office for nine years...
Austerity assumes there is a built in surplus or wealth in the overall governmental system. Cutting from the bottom is alright because, those near the bottom of the economic ladder will receive some phantom assistance from the rest of society and the rest will take care of itself. The main fault with this premise is those with the wealth aren't going to distribute that wealth into the system. Even if they do, the concentration of wealth causes a distribution problem. Fewer hands are sending money into the economic system.
How many cars can one person (realistically) buy? How many shirts, etc.? Having wealth in a very few hands reduces demand. Reduced demand means reduced production, which means reduced employment. Reduced employment further reduces demand and you eventually get economic depression.
Now, before the "wealth distribution-ist" start calling me names, what I am talking about isn't the old chestnut of take from the rich and give to the poor. Sorry, that's not what I'm advocating. It has to do with economic balance. What does that mean? Well, for starters economic balance is based on the principle that money is a constant in economics. By that I mean there is no more or less money, just where it is and how many many have it. The tax system was created to make sure we could maintain a balanced system. Those with less are taxed less and those with more are taxed more, period.
Economic balance is also known by another more familiar name, The Middle Class. When taxes are distributed fairly and evenly, this benefits everyone across the entire economic scale. When the middle class shrinks and they end up paying most of the taxes you have what we have now.
If you're one of the ones standing atop a pile of money and think by just moving the fulcrum of the economic scale closer to you (austerity), this can get the economic system to balance. All this does is shift the scale to where most of the middle class are on the poverty side and end up paying the majority of the taxes. You'll achieve balance, but at an extremely high cost, for the middle class.
Fair distribution is what is needed to maintain our country's infrastructure. When wealthy people are paying half of what the middle class are paying, there is something wrong. Fair share of the tax burden, that's what is needed, not a reduction of governmental services.
The middle class have become too soft. The middle class have allowed themselves to be lured in by the siren call of the wealthy. You too, can eventually pay less and keep more. The lower class are willing to murder the middle class to achieve the false promise of wealth. Look at any tea party gathering and tell me I am wrong. Austerity is just a tool to starve the government to the point where we'll accept any savior. Even some Austrian failed painter...