Sarah Babbage

Sarah Babbage is a fall 2010 intern at the Prospect.

Recent Articles

Democrats Forget What the Deficit Is Made Of

With the announcement this morning that the administration has a new proposal to cut spending by $20 billion for the rest of the fiscal year, the liberal blogosphere is generally agreeing that the final compromise will be about $30 billion in cuts. If that number sounds familiar, it may be because it’s the number Republicans originally proposed in February, before the Tea Party wing successfully convinced GOP leaders to push for more. This is a shameful outcome, but the Democrats have no one to blame but themselves. From the beginning, they have played within the Republican terms of debate, never questioning the GOP orthodoxy’s line that the deficit is a spending problem and that it needs to be dealt with immediately. As Joseph Stiglitz , chairman of the Council of Economic Advisers under Bill Clinton , reminds us in an op-ed in Politico today, the continued economic recession is contributing to the deficit by dragging down government revenues while increasing outlays on automatic...

Another Blow to Midwest Workers

Yesterday, the Republican-controlled Michigan Legislature passed a bill that sets a dangerous precedent for jobless workers and continues Midwest governments’ assault on the vulnerable middle class. While the bill would continue extended unemployment insurance for those already unemployed, it cuts the time new claimants can receive benefits -- from 26 weeks to 20. This would make it the first state to go below the national standard of 26 weeks. Legislators supporting the bill must have a rosy economic outlook if they think future claimants won’t need benefits for as long as they do at present. They ignore the fact that Michigan faces deep, structural economic challenges that aren’t going away anytime soon. Four of its counties have unemployment rates above 20 percent, signaling problems that go far beyond the setbacks of a recession. Its state unemployment rate remains at 10.7 percent, far above the national rate of 8.9. Those jobs aren’t coming back any time soon, and forcing people...

No Free Lunch for Wall Street?

A new Wall Street Journal survey is reporting that economists are split over whether the Republicans’ plan to cut $100 billion from the budget will help or hurt the economy, which is surprising after Ben Bernanke , Mark Zandi , and Goldman Sachs all agreed it would. One surveyed economist’s explanation, however, may provide some insight: "There is no free lunch," said Dana Johnson of Comerica Bank. "Cutting spending does weaken the economy, but it is the right thing to do." That would be the Comerica Bank that received a $2.25 billion government bailout in 2008. So in fact, there is a free lunch: but only for Comerica and the other TARP recipients.

Choosing to Lose

Following the defeat of both the Republican and Democratic budget proposals in the Senate on Wednesday, it seemed both parties had the opportunity to go back to the drawing board and adopt a new strategy. For Democrats, this was the perfect opening to escape the narrow, Republican-enforced confines of a debate on non-defense discretionary spending and look at the bigger picture. Sen. Chuck Schumer , who chairs the Senate Democratic Policy Committee, seized the opportunity by proposing to “put everything on the table,” including a millionaire’s tax, an end to oil, gas and agriculture subsidies, cuts to defense spending, and a crackdown on tax dodging and income-tax sheltering. Moving beyond spending cuts makes sound economic sense – even the $60 billion in cuts proposed by Republicans only represents less than 4 percent of the deficit. But it is also the single most popular tract Democrats could take right now. The left has been desperately calling for them to take a stronger position...

Reality Knocks on Congress' Door

With declining unemployment numbers, rising corporate profits and a growing GDP, many analysts say we’ve reached a turning point in the recovery. The Dow Jones is up 86% from its March 2009 low, private sector jobs are multiplying and export levels are approaching an all-time high. With statistics like these, you could almost believe the Republican argument that trimming billions from the federal budget won’t hurt a recovery. Unfortunately the Republican plan ignores the fact that things are still grim for the vast majority of Americans and none of the underlying causes of the recession have been dealt with. Large corporations and banks continue to dodge taxes through loopholes and offshoring, starving the government of the tax dollars it needs to deal with its deficit. The foreclosure mess is keeping a low profile, although reminders like this weekend’s New York Times profile of Mortgage Electronic Registration System, a mysterious corporation claiming to own title to half the nation...

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