William E. Spriggs
Calling It As It Is
By William Spriggs
Once
again, we stand poised on the precipice of economic calamity because
the Republican-led House is intent on creating crises to push their
agenda. Unfortunately, too many pundits add to Americans' cynicism by
trying to find a way to blame both sides.
The Washington
Post recently tried by saying that Democrats hope Republicans will
fight to shut down the federal government in hopes of gaining advantage
when people figure out the Republicans are to blame. Playing to cynics
also plays well in portraying this as a school yard fight, which in the
age of reality television and voyeurism, is a sales pitch. It however
does no one well if the experts and thought leaders do not play honest
umpires to call the balls and strikes as they see them.
So,
here are the facts. This summer, at a fundraiser in Idaho, the speaker
of the House, John Boehner, said he wanted to create a crisis out of the
federal budget and funding the government. The president clearly stated
he would not negotiate on keeping the government in operation, either
through a fight on a continuing resolution or raising the debt limit. A
continuing resolution is congressional legislation brought about when
Congress has not passed budgets for the many government agencies, and so
instead passes a resolution to allow the government to continue to
operate by authorizing expenditures in one giant bill.
To
be even clearer, this is Congress authorizing money so the federal
agencies can carry out the mandates of the many laws Congress has
already passed-laws to inspect meat for safety, laws to prevent illegal
drugs entering the country, laws to imprison people who violate those
drug laws, laws to create national park lands, laws to ensure people
receive their Social Security benefits and on and on. Since the House
under Speaker Boehner's leadership failed to pass those budget laws, the
House is now in a position to create a crisis as Oct. 1 approaches; the
first day of the new year of the federal budget.
The
debt is the cumulative effect of past congressional decisions. From
1998 to 2001, the federal government ran surpluses, so the outstanding
level of debt fell from $3.77 trillion to $3.32 trillion. This led the
Congressional Budget Office (CBO) to project in January 2001 that
federal debt would go to zero by 2012. From 2001 to 2008, the federal
government ran deficits in part as a stimulus effort directed at the
2001 downturn and in part from funding wars in Iraq and Afghanistan
and in part because the 2001 recovery was weak, so revenues were less
than expected and expenditures (on things like unemployment insurance
and food stamps were higher).
This
ran the federal debt up to $5.8 trillion in 2008. Many of the tax cuts
put in place during that period, and new programs like the prescription
drug benefit for Medicare, were left in place by President Barack Obama.
By 2011, the debt had jumped to $10.1 trillion. In all, CBO figures
that $3.3 trillion less was collected in revenues because of the weak
2001 recovery and the Great Recession of 2008; and spending increased
for those same reasons by $112 billion.
The
programs that Obama inherited account for 44 percent of the increase in
mandatory spending that CBO had not anticipated in 2001, and 49
percent of the increase in discretionary spending that CBO had not
foreseen in 2001 was already added to the federal debt when he took
office. Further, 62 percent of the $2.8 trillion drop in revenue from
tax cuts put in place between 2001 and 2008 that CBO could not have
accounted for in January 2001 were from policies that preceded President
Obama. This means that it would be disingenuous at best, for
Republicans to now argue about raising the debt ceiling to insure that
the United States pays on the debt incurred for policies made since
2001-debts for policies that included those of President George W. Bush,
Senate Leaders Trent Lott and Bill Frist, and Speaker of the House
Dennis Hastert.
These
crises manufactured by House Republicans are designed to bend economic
policy in their direction. But, given that so far it is President Obama
who has bent, the reality is that the fiscal policy pursued since 2010
and the end of the American Recovery and Reinvestment Act has been
declining fiscal stimulus. In the 11 quarters since the last quarter of
2010, the federal government has been a drag on the recovery in all but
two because it continues to grow smaller-paying fewer workers and buying
fewer goods and services from American companies desperate to grow
sales. In part this reflects the president's gambit with the
sequestration that Republicans took, shrinking GDP growth by over a
point in the fourth quarter of 2012 when government procurement got
rolled back in anticipation of fewer contracting dollars. Clearly, these
actions take away job opportunities.
Republicans
have not put forward a new vision for America. Instead, the only
problem they see in the country right now is the size of the federal
government. The persistent high levels of unemployment, the drop in
median family income, even the increase in child poverty are not issues
they are producing solutions for-except a view that smaller government
will solve them. So unlike all past economic downturns, like under
Presidents Ronald Reagan or George H.W. Bush, they are testing a new
economic theory that a shrinking government will lower unemployment,
raise family incomes and reduce child poverty. Except, following their
policy of a shrinking government, the opposite is occurring. And last
week, the Republican House voted in the face of rising child poverty to
cut $40 billion from the Supplemental Nutrition Assistance Program
(SNAP-food stamps).
In
fairness to Republicans, the president proposed a recovery act that was
too small and designed to end too soon. But, he has offered various
plans since to increase American investment in our roads and bridges
that would get many construction workers back to work while saving our
children the burden of replacing bridges we could be repairing. And, he
has offered plans to return teachers to the classroom, sending federal
dollars to help our local schools replace the hundreds of thousands of
local public education workers lost when the Great Recession sucked
money out of their school district budgets. The president's offer would
reverse the first serious decrease in per-pupil expenditures American
children have experienced in the post-World War II era. Republicans have
rejected both ideas, since they would make "the government bigger."
Republicans
have argued that government debt is a moral issue. But, this confuses
saving and investing. It does save money now when you don't fix our
roads or pay for teachers in our children's classrooms. But that doesn't save money in the long run. Cutting those expenditures cuts
on our investment. It leaves a long and expensive "to-do" list for our
children when they must confront a broken transportation system that
cannot draw investors to America for fear they can't move their goods
efficiently. It also hurts our children's education, leaves them less
educated and skilled for a world that grows more technical and
sophisticated every day.
Several
Senate Republican leaders see this current grandstanding by House
Republicans as harmful to the Republican party. Voters will not be
fooled, even if the Sunday talking elite try to make this into a food
fight. Shutting down the government, moving America backward and
standing for nothing is not a formula to draw votes. With median family
incomes still down from 2007, America's working families do not believe,
as some House Republicans, that a private sector led by JPMorgan-and
its acknowledgement of multiple counts of law violations, and perhaps
$20 billion in fines for corrupting the financial system and causing the
collapse of the world's economy-is the solution.
The
stock market is booming. The "job creators," including those like
JPMorgan, that face legal charges, have soaring incomes. They are not
riding in on white horses with job offers to save Middle America. Wall
Street is dancing to music that only the House Republicans can hear,
because on Main Street, there is still the silence of looking for work.
If the pundits call it honest, this is a big strike for Republicans for
playing with the economy again and failing to offer a vision of jobs and
rising pay and investing in America's children. After voting to take
food away from the tables of America's children, this will be strike
two.
Follow Spriggs on Twitter: @WSpriggs.
Contact: Amaya Smith-Tune Acting Director, Media Outreach AFL-CIO 202-637-5142.
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