Government spending

Paul Krugman Appears On ‘Newsnight,’ Battles British Conservatives On U.K. Austerity Policies (VIDEO)

The Huffington Post

For most Americans, a trip to London means drinking a few pints and maybe taking a picture of one of those guards with the hats. For Paul Krugman, it means critiquing the entire direction of Britain’s economic policy.

Krugman, the Nobel Prize-winning economist and left-leaning New York Times columnist, appeared on the BBC program “Newsnight” this Wednesday, jousting with two British deficit hawks over the U.K.’s austerity agenda.

The Brits — venture capitalist Jon Moulton and Conservative Member of Parliament Andrea Leadsom — argued that the British government has to reduce spending if the country is to dig itself out of the economic slump it’s been in. Krugman countered that such a strategy could cause Britain’s economy to implode — since, he said, the public and private sectors need to circulate money to each other in order for anyone to prosper.Krugman Newsnight

“We are not a household. We are an economy,” said Krugman. “Your spending is my income, and my spending is your income.”

As Krugman pointed out during the “Newsnight” segment, and later in a NYTcolumn, the austerity question is one that extends beyond Great Britain. Eurozone countries are in the midst of their own austerity struggle right now, one whose effects have been felt most strongly in Greece, where government spending cuts have resulted in riots and strikes and boosted the political fortunes of the far-left, anti-austerity Syriza party.

And in the United States, economists and politicians are engaged in an ongoing debate over the best way to jump-start the lagging economy — and here, too, Krugman hasrepeatedly counseled against the kind of major government spending cuts that conservative policymakers have championed.

Krugman’s argument is that such cuts would cause a major contraction in the American economy, a point that even Mitt Romney, the presumptive Republican nominee for president, appeared to echo in an interview with Time a few days ago.

House GOP again holding 150 million Americans hostage, demanding dangerous spending cuts during a Depression

What in the world is the House GOP trying to accomplish?

Oh, yeah, make Obama a one term president, even if it means going against the principles and values of our country.  It seems their current mantra is: “Democracy be damned!  America be damned!  Power to the Corporations!”

AMERICAblog

We are in a Depression, according to Paul Krugman. And the extremists controlling the House GOP are still demanding even more immediate spending cuts, which is dangerous as hell during an economic crisis.

Decreased spending depresses the economy even more – just look at what happened in England after the conservative government massively cut spending – the economy collapsed and the budget deficit actually got worse.  Why?  Because when the economy collapses more people are unemployed, which lowers government tax revenue and increases government spending on unemployment and other related programs.  Revenue decreases, spending increases, budget deficit increases.

The House GOP’s proposed additional spending cuts will hurt economic growth, and what’s worse, the House GOP isn’t done there. They also think the payroll tax holiday is a bad idea, and they think the unemployment benefits are too large.  According to a slew of mainstream economics, including those on Wall Street, the payroll tax holiday and unemployment benefit extensions could be worth as much as 1.5 percentage points of GDP next quarter (meaning that without them, GDP might drop by 1.5 percentage points, which is huge in a depressed economy).  That’s what the House GOP wants to get rid of, 1.5 percentage points of GDP.

Let me put this in terms folks can appreciate. A week before Christmas, House Republicans want to increase taxes on every single worker in America, and they want to cut further whatever meager income the unemployed are currently getting. And to top it off, they want to cut spending overall, which will further cut economic growth and increase unemployment even more.

Merry Christmas!

Brought to you by the Tea Party, another name for Gingrich/Armey. It’s 1994 all over again.  And yet again, when Republicans are elected to national office, the crazies take over every time.

Rachel Maddow: GOP declares war on own promises (apparently)

AP 

Republicans have already violated some of the vows they made in taking stewardship of the House.

Their pledge to cut $100 billion from the budget in one year won’t be kept.

The first spending cut measure to come to the floor — imposing a 5 percent spending cut on lawmakers’ budgets for office expenses and staff salaries — is hardly in keeping with the promise to return spending back to pre-Obama levels. Such costs have risen by 14 percent since that time.

And for a coming vote seeking to repeal the health care overhaul, the first major initiative of the new Congress, lawmakers won’t be allowed to propose changes to the legislation despite Republican promises to end such heavy-handed tactics from the days of Democratic control.

Is business as usual really back so fast? That’s not clear one day after Democrat Nancy Pelosi yielded the gavel to the new Republican House leader, John Boehner. The GOP came to power in the House with an agenda that, if carried through, would in fact change how the government spends, taxes and does its legislative business.

But those with long memories may have the feeling they’ve seen this movie before.

After the GOP won control of Congress in the 1994 elections, the House churned out a series of votes aimed at fulfilling promises made in the party’s “Contract With America.” Most hit a dead end in the Senate. The GOP’s new governing document, “A Pledge to America,” covers many of the same themes and faces many of the same problems.

The effort to repeal the health care law, for one, is expected to pass in the House and fail in the Senate, going nowhere.

A look at some of the Republican promises in the campaign that delivered them control of the House, and their prospects now:

CUT SPENDING: “We will roll back government spending to pre-stimulus, pre-bailout levels, saving us at least $100 billion in the first year alone,” the GOP pledge stated.

It turns out $100 billion is way out of reach.

Eight False Things The Public “Knows” Prior To Election Day – Reality Check (Redux)

Campaign For America’s Future

Here are eight of the biggest myths that are out there that Tea Partiers and the GOP (one in the same, actually…) are spreading:

1) President Obama tripled the deficit.
Reality: Bush’s last budget had a $1.416 trillion deficit. Obama’s first budget reduced that to $1.29 trillion.

2) President Obama raised taxes, which hurt the economy.
Reality: Obama cut taxes. 40% of the “stimulus” was wasted on tax cuts which only create debt, which is why it was so much less effective than it could have been.

3) President Obama bailed out the banks.
Reality: While many people conflate the “stimulus” with the bank bailouts, the bank bailouts were requested by President Bush and his Treasury Secretary, former Goldman Sachs CEO Henry Paulson. (Paulson also wanted the bailouts to be “non-reviewable by any court or any agency.”) The bailouts passed and began before the 2008 election of President Obama.

4) The stimulus didn’t work.
Reality: The stimulus worked, but was not enough. In fact, according to the Congressional Budget Office, the stimulus raised employment by between 1.4 million and 3.3 million jobs.

5) Businesses will hire if they get tax cuts.
Reality: A business hires the right number of employees to meet demand. Having extra cash does not cause a business to hire, but a business that has a demand for what it does will find the money to hire. Businesses want customers, not tax cuts.

6) Health care reform costs $1 trillion.
Reality: The health care reform reduces government deficits by $138 billion.

7) Social Security is a Ponzi scheme, is “going broke,” people live longer, fewer workers per retiree, etc.
Reality: Social Security has run a surplus since it began, has a trust fund in the trillions, is completely sound for at least 25 more years and cannot legally borrow so cannot contribute to the deficit (compare that to the military budget!) Life expectancy is only longer because fewer babies die; people who reach 65 live about the same number of years as they used to.

8) Government spending takes money out of the economy.
Reality: Government is We, the People and the money it spends is on We, the People. Many people do not know that it is government that builds the roads, airports, ports, courts, schools and other things that are the soil in which business thrives. Many people think that all government spending is on “welfare” and “foreign aid” when that is only a small part of the government’s budget.

This stuff really matters

H/t Kato

Related Articles

Eight False Things the Public “Knows” Prior to Election Day

Truthout

There are a number of things the public “knows” as we head into the election that are just false. If people elect leaders based on false information, the things those leaders do in office will not be what the public expects or needs.

Here are eight of the biggest myths that are out there:

1) President Obama tripled the deficit.
Reality: Bush’s last budget had a $1.416 trillion deficit. Obama’s first budget reduced that to $1.29 trillion.

2) President Obama raised taxes, which hurt the economy.
Reality: Obama cut taxes. 40% of the “stimulus” was wasted on tax cuts which only create debt, which is why it was so much less effective than it could have been.

3) President Obama bailed out the banks.

Reality: While many people conflate the “stimulus” with the bank bailouts, the bank bailouts were requested by President Bush and his Treasury Secretary, former Goldman Sachs CEO Henry Paulson. (Paulson also wanted the bailouts to be “non-reviewable by any court or any agency.”) The bailouts passed and began before the 2008 election of President Obama.

4) The stimulus didn’t work.
Reality: The stimulus worked, but was not enough. In fact, according to the Congressional Budget Office, the stimulus raised employment by between 1.4 million and 3.3 million jobs.

5) Businesses will hire if they get tax cuts.
Reality: A business hires the right number of employees to meet demand. Having extra cash does not cause a business to hire, but a business that has a demand for what it does will find the money to hire. Businesses want customers, not tax cuts.

6) Health care reform costs $1 trillion.
Reality: The health care reform reduces government deficits by $138 billion.

7) Social Security is a Ponzi scheme, is “going broke,” people live longer, fewer workers per retiree, etc.
Reality: Social Security has run a surplus since it began, has a trust fund in the trillions, is completely sound for at least 25 more years and cannot legally borrow so cannot contribute to the deficit (compare that to the military budget!) Life expectancy is only longer because fewer babies die; people who reach 65 live about the same number of years as they used to.

8) Government spending takes money out of the economy.
Reality: Government is We, the People and the money it spends is on We, the People. Many people do not know that it is government that builds the roads, airports, ports, courts, schools and other things that are the soil in which business thrives. Many people think that all government spending is on “welfare” and “foreign aid” when that is only a small part of the government’s budget.

This stuff really matters.

If the public votes in a new Congress because a majority of voters think this one tripled the deficit, and as a result the new people follow the policies that actually tripled the deficit, the country could go broke.

If the public votes in a new Congress that rejects the idea of helping to create demand in the economy because they think it didn’t work, then the new Congress could do things that cause a depression.

If the public votes in a new Congress because they think the health care reform will increase the deficit when it is actually projected to reduce the deficit, then the new Congress could repeal health care reform and thereby make the deficit worse. And on it goes.