This is a point which is apparently either not accepted or ignored by both Republicans and Democrats in the debate – deficits are eliminated by jobs. Therefor, macroeconomic expansion is fiscally responsible. And cut-backs, even those endorsed by the Democrats, may very well extend the recession, reduce revenues, and maybe even aggravate the deficit – which will of course lead to more proposals for cuts…
But it’s counter-intuitive, at least to American values-based economics.
This Kos post elaborates to some extent.
Meanwhile, even though the Democrats have essentially caved on cutback numbers, it appears we’re headed for a government shut down over Republican riders involving abortion and the EPA. David Kurtz asks, “Is it really about the deficit?“
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April 7, 2011 at 8:26 am
Plain Jane
Good question, Eric. It appears that they are attaching their social wish list to budget bills in the hopes that in desperation to prevent a shut down the Democrats will cave, like they did on the extension of the Bush tax cuts for the wealthy in order to get an unemployment extension. They have no interest in honest negotiations and no matter WHAT the Democrats surrender, they want to shut government down as a demonstration that government isn’t important in most people’s lives. The Social Security checks will still get mailed, of course, and soldiers supplied and paid so what else does government do that anyone should care about?
Their supporters don’t have a clue about the chaos a govt. shut down creates and the negative impact that will have on the economy, and most of them probably don’t really care as long as they are inconvenienced.
April 7, 2011 at 8:27 am
Plain Jane
*aren’t inconvenienced.
April 7, 2011 at 9:04 am
Moonshadow
Once upon a time negotiation meant, “if you give up X I will reciprocate by doing (or giving up) Y.” Now negotiation means . . . “we do it ‘my’ way or I will wreck you in the process.
I am so disheartened by the current state of affairs I just want to curl up in a ball in the corner. Tho’ that’s not going to change anything either but that is how I feel. I write my representative and my senators as well as other elected officials, but given the fact they are already advocating for the things I believe in it seems meaningless.
At least in May and a bit of June I will find some solace in New Mexico working as volunteer staff on several Sierra Club service trips.
Yet . . . I fear for our country . . . I fear for our people (even the misguided and genuinely bad ones) . . . and I fear for the health of our environment as well as the planet.
I am profoundly sad . . . and yes angry . . . but feeling impotent to address the ills that now confront us.
April 7, 2011 at 9:32 am
Bruce Ross
Funny, when Republicans say that that the delays, litigation and uncertainty created by CEQA stall business development and jobs, they’re accused of hijacking the budget for leverage on unrelated issues.
April 7, 2011 at 9:45 am
Moonshadow
well many people are going to get hurt in this dustup Bruce . . . and many, perhaps most, would like to see a genuine spirit of compromise.
Here’s a link to an article detailing the impacts of the potential shutdown here in California.
Federal shutdown would hit California hard
so in their misguided wisdom the GOP are going to hurt myriad people with their obstinacy?
April 7, 2011 at 10:38 am
Bruce Ross
Moonshadow,
Perhaps I was veering off topic. (Different government shutdown — aren’t we used to them in California?)
April 7, 2011 at 10:39 am
Bruce Ross
But, yes, it’s a very bad idea. The Congress should do its work — and the enthusiasm for “shuttin’ ‘er down” among some in the GOP is pointless and destructive.
April 7, 2011 at 10:44 am
Ernie's Place
Sadly, the IRS will be business-as-usuall. The long term effect of a Govt. shutdown.
April 7, 2011 at 11:25 am
huufc
Just remember, the federal budget is six months late. It was due last year when the Democrat party controlled both houses of Congress and the White House.
April 7, 2011 at 11:34 am
Plain Jane
The Democratic party was in the majority, but conservatives controlled congress. While the GOP vote mostly as a block, there are a number of Democrats who vote with them consistently. Haven’t you noticed?
April 7, 2011 at 12:39 pm
Eric Kirk
Well, as we’ve learned, a Democratic majority is 61, while a Republican majority is 40.
April 7, 2011 at 4:50 pm
moviedad
None of these partisans care about people. Will the partisans suffer? Do they ever suffer the results of their decisions? Never. They take care of their own. To these people the vast majority of us are nothing but a mob, irrelevant sheep to be herded into our pens.
As long as we continue to be placated by the tired, stale “good cop/bad cop” con game of the rich; we’ll get what we deserve, nothing.
Time to walk like an Egyptian.
April 7, 2011 at 5:26 pm
Anonymous
Wtf? We dems were the majority in the house and senate but it was contolled by conservatives? Are you high. We dems pushed thru loads of things with no conservatives or with 2 or 3 signing on so I call bullshit on that. The dems (yes I am one) were more concerned about passing other things in case they lost the majority to be bothered with the budget and boy am I pissed about it.
April 7, 2011 at 7:24 pm
Plain Jane
Do you really think all Democrats are liberal, 5:26?
April 7, 2011 at 7:29 pm
Anonymous
Plain jane you are high or nuts. That was just plain goofy.
April 7, 2011 at 8:16 pm
Not A Native
Eric, I agree that growth(through higher employment) can eliminate government deficits. But the added employment has to be tasks that create real value, not speculation based bubbles or legalized ponzi schemes.
For example, we could decide to rebuild the railroad in HumCo. That would create many jobs both in construction and operation. And we could mandate that all goods be shipped by rail to ensure rail traffic. But if shipping costs are higher here than what other regions incur, we’ll be poorer as a group, although more equally poorer than otherwise.
And I’m suspicious about what’s been left out. Eliminating deficits with growth while setting aside higher taxation on concentrations of wealth sounds to me a lot like ‘a rising tide lifts all boats’.
April 7, 2011 at 8:24 pm
Plain Jane
It was a serious question, 7:29. If you really think all Democrats are liberal, you need to do some research on Blue Dog Democrats, some of which are fairly moderate like our Mike Thompson and Gabrielle Giffords, but the Democrats from the south are more conservative than some Republicans.
April 7, 2011 at 8:24 pm
Eric Kirk
NAN – not that I’m advocating a bubble policy, but bubbles do in fact reduce deficits.
In any case, Keynesian economics don’t often create bubbles because they involve labor intensive spending. It’s real money poured into real infrastructure, which is usually a foundation for economic growth.
April 8, 2011 at 9:22 am
Eric Kirk
So now that the shut-down is inevitable, the pol-watch question is going to be “whom will the voters blame?” Or more to the point, “Whom will the independent voters blame?” We know how the partisans will fall.
The Democrats are claiming that the only hang-up is the abortion issue – funding for Planned Parenthood and military abortions. It seems that some of the Tea Party frosh reps who promised 100 billion in cuts think they can get away with 40 billion if they can strike a culture-war blow. So when the Democrats frame the cause of the shut-down in terms of anti-abortion extremism, Boehner, who is clearly not the leader of his party at this moment, can’t acknowledge it nor deny it. He’s forced to waffle. The Democrats being uncharacteristically on message and the Republicans being uncharacteristically divided – the Republicans will probably take the hit.
What will that mean in a year-and-a-half? That’s a long ways away. But then, the budget matter hasn’t been settled yet, and if the shut-down does extend itself and does take a toll on the slow-moving recovery, independents are probably going to be sorry they voted tea party. But a large number of independents aren’t the brightest bunch when it comes to understanding politics, and tend to change their minds on a dime.
So it’s points to Democrats. But if the Republicans find a face-saving way out before the shut-down takes any serious toll on a big scale, they’ll probably weather it.
That’s my sports reporting take. Of course, that we’ve reached this point in politics where for one side the compromise that has characterized politics in a democratic republic for hundred of years is seen as weakness and failure is of course depressing.
http://www.dailykos.com/story/2011/04/08/964783/-Reid-says-GOP-threatening-shutdown-over-family-planning-funding,-Boehner-avoids-talking-specifics
April 8, 2011 at 2:02 pm
Not A Native
I don’t believe its inevitable. In fact I’ll predict they make a last minute finesse or over the weekend at the latest. Most government functions are shutdown for weekends anyway. So, other than the uneeded logistical moves, a weekend shutdown is merely ominous.
Eric, you ignored my point that ‘infrastructure’(like a HumCo railroad or Alaska road to nowhere) is not necessarily an economically productive expenditure.
You seem to be parroting a nostalgic view of the New Deal projects, while omiting the facts that domestic production and overseas destruction that accompanied WWII was the cause of US propsperity and expanding US foreign markets in the 50′s through 80′s.
Economically, it was the war and aftermath that brought the US out of the great recession, not the New Deal spending. And remember Roosevelt was no Keynesian, he was very averse to deficits. He passed large progressive tax increases on the wealthy and more tax increases after the war began.
April 8, 2011 at 2:16 pm
Moonshadow
NAN @ 2:02 . . .
what do you think all that war spending is? It is the same kind of deficit spending that all the later public works and infrastructure spending was . . . just of a different kind. The military spent its dollars building weapons, bases, as well as feeding/housing the troops. It really does not matter if the “Keynesian” effect is because of the war machine or the post-war programs.
April 8, 2011 at 3:08 pm
Moonshadow
About 30 minutes ago this article went up on the NY Times website:
Conservatives Urge Boehner to Cut a Budget Deal and Move On
This part is telling . . .
. . . Mike Huckabee, the former governor of Arkansas and a possible presidential candidate, said Friday afternoon in an interview that a shutdown would “hurt the Republicans, not the Democrats.”
April 8, 2011 at 3:35 pm
Plain Jane
I’m amazed that even Bachmann has finally realized this isn’t the hill she wants to die on.
April 8, 2011 at 3:52 pm
Not A Native
Yep Moonshadow, I agree that war spending is deficit spending. As it turned out, from an economic point of view, the spending for WWII made a return for the US. But in contrast, spending on the Vietnam war was unproductive, resulting in an economic decline.
If confidence is the problem, almost any kind of government spending can ease that. I just don’t think thats our biggest problem right now.
My point is that simply deficit spending, in and of itself won’t resolve structural economic weaknesses that result from competition. Right now, US productivity isn’t large enough to support our level of consumption in relation to other nations that are becoming more productive. Deficit spending that simply maintains excessive consumption won’t be productive.
And our increasingly large inequalities of ability and wealth is reducing our capability to increase productivity and our willingness to make long term investments. Inequality is also forcing unproductive kinds of consumption reductions.
I’d guess Government spending in many technology areas has been economically beneficial, vaccines, polio eradication, the space program, the interstate highway system. But in other areas less so, fusion energy, nuclear weaponry, agricultural subsidies, reclamation projects, fossil fuel subsidies.
April 8, 2011 at 6:24 pm
Plain Jane
Apparently CNN caught Kyl in a HUGE lie. He claimed that well over 90% of Planned Parenthood’s funds were spent on abortion. The actual percentage is 3%. A spokesman for his office said, “his remark was not intended to be a factual statement, but rather to illustrate that Planned Parenthood, a organization that receives millions of dollars in taxpayer funding, does subsidize abortions.”
Paraphrased, he deliberately lied to make people believe that federal money is being used for abortions.
April 8, 2011 at 7:14 pm
Moonshadow
NAN @ 3:52pm . . .
You don’t think agricultural subsidies are worth it? Don’t you realize that without them you’d be paying even more than you pay now at the market? Do you realize how many farmers would be forced off their land without them?
You may not realize this but we have fewer farmers now than when I was born in the 1950′s and they are feeding more people than ever. Presently the figures I can find indicate that each farmer feeds more than 144 people. If we make it more difficult for the farmer it becomes harder to feed all those people.
April 8, 2011 at 7:24 pm
Moonshadow
It seems there is a last minute deal to avert the shutdown.
Last-Minute Deal Averts Shutdown
and . . .
April 8, 2011 at 7:55 pm
Plain Jane
We have fewer farmers because they’ve been taken over by agribusiness, Moonshadow. Subsidies intended to help family farms instead helped massive corporations like Archer-Daniels-Midland drive small farms out of business. Family farms are the sympathetic face they put before us when they want subsidies, but most of the money goes to corporations.
Here’s Joseph Stiglitz’ opinion of farm subsidies.
http://www.guardian.co.uk/commentisfree/2006/oct/24/stig
April 8, 2011 at 8:00 pm
Not A Native
Well Eric’s pronouncement that “the shut-down is inevitable” was his usual chicken little hysteria. No doubt he’ll claim as an excuse that others said the same thing. Yeah, yeah, I’ve already heard it before , ‘but all the other kids did it, so why hold me responsible?’
Yes Moonshadow, agricultural subsidies are now resulting in misallocation of resources toward excess commodity production at the expense of the environment and human nutrition. Higher food prices would be a good thing for the environment, the American health, and would reduce incentives to use energy intensive farming methods. Most subsidies go to large agribusiness rather than the smaller farmer you’re so enamoured of. Without subsidies, smaller producers would have an advantage to market thier products locally and regionally rather than being forced into a national commodity market in competition with the largest and most subsidized producers.
April 8, 2011 at 8:10 pm
anon
eat the rich
April 8, 2011 at 8:41 pm
Plain Jane
And the problem is even worse in poor countries which become more dependent on food imports while their own farmers are devastated.
April 9, 2011 at 6:36 am
Moonshadow
NAN and PJ . . .
Your assertions about farm subsidies in this country truly show your ignorance. It appears you only consider the views of the ‘left’ analysis without considering the views of those who actually do the work.
While I do not do the physical work I am the fourth generation owner of 1,600 acres of farmland in Kansas. The farmers who work my land have been on the land as many generations. We take pride in the food we produce (wheat, milo, and beef). The crop subsidies we receive help to smooth out the big spikes in the costs of fuel for the machinery, seed (yes we save seed but one does still have to purchase additional), fertilizer, and pesticides/herbicides. Both the farmers who run my land and I share in the costs to operate the farm and I alone carry the full burden of the property tax in addition.
With the recent run up in fuel costs and the dry weather in the farm belt we are going to need good yields and good crop prices to make up for the huge increase in the price of oil which drives the prices of fertilizer and fuel. We use as little fertilizer as possible preferring to gain nutrients through building up the soil by using no till cultivation which involves leaving the stubble and drilling the seed through the stubble. We soil test so that we apply only the amounts and types of fertilizer needed. Weed control chemicals are sometimes needed when hardy varieties of some weeds appear.
It is important to understand farming is a business and no matter the size of the farm the operators/owners have to control costs just like any other business. That means using only the inputs that are absolutely needed.
Now here’s the rub . . . even if mother nature cooperates with adequate moisture (we’re a dry land operation . . . eg: no irrigation) the price we receive is dependent on almost completely on factors out of our control. Weather and crop production in Australia, Russia, or Argentina to name a few. Furthermore because our prices are set by what our grains and livestock sell for on the commodities exchanges we have zero control over what we’re paid . . . and I mean zero!
From year to year we don’t always do much more than break even which is where the subsidies come in. They (the subsidies) are based on the average county price in an area so that if the price is below a certain level we’re paid, above that level we’re not paid at all or only paid a much smaller amount.
As for the loss of farmers in the heartland . . . the greatest factor driving the exodus of farmers has been low crop prices (relative to input costs), high land and machinery costs which keep younger farmers from getting a start, and unfortunately a lack of interest on the part of many farm youth to stay on the land. These youth see that they can make a future for themselves more easily in the cities or prefer the faster paced lifestyle they can have there.
Adding to those pressures are the demise of our small towns as economic pressures have driven the small shops and businesses out because of the big box phenomena (eg: Wal Mart, etc) in some of the nearby but larger communities. It is not unheard of to have to drive 60 to 70 miles to purchase food and necessities because the local market could not compete, or the local hardware store could not price their stock competitively due to shipping costs.
In a nut shell it is not so simple . . . those of you who rag on the subsidies or chemical use really need to spend a season in our shoes. Learn what it really is like. Much of what passes for analysis in the progressive media is laughable in its narrowness and lack of understanding of what the actual situation is for the American farmer. It seems you care more about the farmers elsewhere than the ones here at home who produce the food you are eating. If you want subsidies to go away . . . then propose an alternative that truly works. If you want organic grains then help the American farmer to develop economically feasible places to haul and sell their grain at. We would love to grow organic grains on our land but the extra premium in price we would get is not enough to cover the extra hauling costs to the nearest elevator that accepts organic grains.
As I said . . . it is not so simple.
So please climb down off your high horses and take the time to really understand what you are commenting on . . . please take the time . . . because right now, you just have no idea of what you are talking about.
April 9, 2011 at 7:08 am
Plain Jane
If you think 1600 acres means you are part of agribusiness, you should think again, Moonshadow.
“In 2009, Congress doled out $15 billion in farm subsidies. According to Food First, 90 percent of that sum went to the production of five crops – corn, wheat, rice, soy and cotton.
“Most of that 90 percent went to the large farming corporations,” Shattuck said. “Much of those commodities were not used for food, but for animal feed and industrial applications. Cotton is not even a food.”
The subsidy system primarily assists agribusiness, firms like Archer Daniels Midland and Cargill. Mid-sized farms, although they often appear to make a great deal of money, often and the year in the red because of costs.
“A mid-sized farm will typically have $500,000 in sales and $600,000 in costs,” she said. “At the same time, ADM, with the aid of their farm subsidy, will buy corn for cheaper than it cost the mid-sized farmer to produce it.”
Read more: http://www.ibtimes.com/articles/26961/20100604/farming.htm#ixzz1J2T4uVGu
April 9, 2011 at 7:18 am
Moonshadow
PJ . . . you really have no idea . . .
fine believe what you believe . . . I’m on the ground with my operation and I know what is and what is not.
You read and read and read . . . why don’t you come out to Kansas or Iowa with me and get some boots on the ground experience????
April 9, 2011 at 7:36 am
Plain Jane
I prefer local, organic, sustainable farming, but thanks for the invite, Moonshadow.
April 9, 2011 at 7:55 am
Plain Jane
Have you ever considered changing your farming to more of a Polyface type of grass farming, Moonshadow? They are organic, sustainable and profitable without subsidies.
April 9, 2011 at 8:45 am
Moonshadow
Oh Plain Jane you make me laugh at your naiveté!
Clearly you know little of Kansas and where my farming operation is. ROFL!!!
I am sorry . . . I don’t mean to laugh but really you are clueless.
April 9, 2011 at 9:08 am
Moonshadow
For some statistics on farms in the USA . . .
http://www.epa.gov/agriculture/ag101/demographics.html
One section of note:
While my holding may be small, when it is combined with the holdings of the farmers working my ground we become a significantly larger operation.
Now lest you harp more on the large “agribusiness” operations let me point out that all of the farmers in this country are needed. Secondly that 90% that is individuals and families is made up of real people whose livelihood you threaten when you talk about eliminating subsidies.
And I would appreciate it if rather than throwing links and articles at me you actually employ some original thought in your replies to me.
April 9, 2011 at 9:09 am
Plain Jane
I never claimed to be a farmer, but I am capable of reading news about it. I’m sure you are totally convinced that the only way to keep those checks coming is via tax payer subsidies and heavy pesticide / herbicide use. Probably using Monsanto seeds. Why grass farming can’t be done in Kansas is a mystery that hopefully you can explain. You do know what grass farming is, right?
April 9, 2011 at 9:36 am
Moonshadow
PJ . . . we do not use monsanto seeds for our Wheat, our herbicide and fertilizer use is no where near “heavy”. And just where would I sell that grass you’re so enamoured of? Last I heard people ate bread and pasta . . . and those are made from wheat. If you mean grass for pasture . . . we only have a few cattle and that business is even more difficult than the grains business.
Then again it is clear you only have the perspective of a layperson with no experience in the realities.
This is my last post on this topic.
April 9, 2011 at 9:45 am
Plain Jane
Oh, you don’t know what grass farming is. They don’t sell grass. Michael Pollen wrote about Polyface Farm in his book, The Omnivore’s Dilemma, the North Coast Journal did an article about them recently and there is an abundance of material about it on the net, including Polyface web page. I won’t annoy you with links and I’m too lazy to write an essay when the information is so easily available about Polyface and grass farming in general.
April 13, 2011 at 5:43 pm
Not A Native
Well Moonshadow, Kansas isn’t exactly Iowa, but its pretty close. So here’s the NYTYimes report about what’s really happening in your neck of the woods, despite your denials, and it isn’t pretty.
“In 2009, an estimated 641 townships(in Iowa) exceeded the sustainable rate(of soil erosion), including nearly 400 that had double or more that rate.” And the USDA subsidy system is partly to blame.
http://www.nytimes.com/2011/04/13/business/13erosion.html