Budget

Take That, Political Science!

AP Photo/Lawrence Jackson
AP Photo/Lawrence Jackson Senator Tom Coburn, a Republican from Oklahoma and author of legislation designed to cut off the vast majority of federal support for political-science research T his week, ten years after swearing to destroy Saddam Hussein and build democracy in Iraq, the United States took a step toward dismantling its investment in studying how democracy works. For more than 15 years, congressional Republicans have been trying to do away with federal funding for political-science research. Every time until now, political scientists successfully fought back. One reason they could: The pot designated for political science in the National Science Foundation (NSF) was a tiny percentage of overall research money—about $10 million out of a $7 billion budget. That's less than two-tenths of a percent. But it's also the majority of total grant funding for political-science research. The field provides us with much of what we know about how democracies, including our own, function (...

The Contest Over the Real Economic Problem

flickr/Starley Shelton
“Our biggest problems over the next ten years are not deficits,” the president told House Republicans Wednesday, according to those who attended the meeting. The president needs to deliver the same message to the public, loudly and clearly. The biggest problems we face are unemployment, stagnant wages, slow growth, and widening inequality—not deficits. The major goal must be to get jobs and wages back, not balance the budget. Paul Ryan’s budget plan—essentially, the House Republican plan—is designed to lure the White House and Democrats, and the American public, into a debate over how to balance the federal budget in ten years, not over whether it’s worth doing. “This is an invitation,” Ryan explained when he unveiled the plan Tuesday. “Show us how to balance the budget. If you don’t like the way we’re proposing to balance our budget, how do you propose to balance the budget?” Until now the president has seemed all too willing to engage in that debate. His ongoing talk of a “grand...

The Smart Strategy Behind Paul Ryan's Stupid Budget

Flickr/Donkey Hotey
For an ambitious politician, a spot on your party's presidential ticket is fraught with danger. On one hand, you immediately become a national figure, and if you win, you're vice president and you've got a good chance to become president. On the other hand, if you lose, you may wind up the target of contempt from forces within your own party and quickly fade away. Look at the list of recent VP losers: Sarah Palin, John Edwards, Joe Lieberman, Jack Kemp. None of them had any political future after their loss. And then there's Paul Ryan. You have to give him credit for one thing. Unlike, say, Palin, he didn't let his time on the national stage give him delusions of grandeur. Instead of proclaiming himself the leader of a movement, he went right back to what he was doing before: using the budgeting process to push an extraordinarily radical agenda, all couched in enough numbers and figures to convince naive reporters that he's a Very Serious Fellow, despite the fact that his numbers and...

When Public Is Better

Flickr/Mirsasha
L ong before we thought of founding The American Prospect in 1989, I came to know Paul Starr through a prescient article titled “Passive Intervention.” The piece was published in 1979, in a now-defunct journal, Working Papers for a New Society . As Paul and his co-author, Gøsta Esping-Andersen, observed, the American welfare state is built on terrible, even disabling compromises. Progressives often lack the votes to pass legislation to deliver public benefits directly. So they either create tax incentives or bribe the private sector to do the job, thus inflating a bloated system. “The problem is not too much government activism,” they wrote, “but too much passivity.” Their two emblematic examples were housing and health care. In housing, tax advantages became an inflation hedge for the affluent and drove up prices. Low-income homeownership programs, run through the private sector, had huge default rates. In health care, the political compromises necessary to enact Medicare excluded...

What We Have Here Is a Failure to Communicate. Sort Of.

Congressional Republicans, apparently. (Flickr/jumbledpile)
Like any number of liberals, I have from time to time complained about the difficulty of having substantive arguments about politics when your opponents refuse to acknowledge plain facts about the world. It's hard to have a discussion about what to do about climate change, for instance, if the other person refuses to believe that climate change is occurring. It's hard to discuss how to handle market failures in health insurance when the other person holds that markets are always perfect and government health insurance is always more expensive. As frustrating as those kinds of impasses are, at least you're talking about complex systems that require at least some investment of time to understand. But there's a rather incredible dance going on right now in the dispute over the budget that takes every stereotype liberals have about know-nothing Republicans and turns it up to 11. To sum it up, Democrats are being forced to negotiate with a group of people who are either so dumb they can't...

Few Waves in California

Flickr/msun523
Flickr/msun523 Cuts on overtime for customs inspectors at the Port of Long Beach in Long Beach, California, may hinder its ability to process cargo. I f the sequester had come to California 25 years ago, its effect would have been catastrophic. Today, its effects are decidedly less draconian. Nonetheless, California has a considerably less robust economy than that of the late '80s, and the sequester will cool off the state’s already tepid recovery. In considering the effects of the sequester, the difference between the California economy of 1942-1992 and its economy today is critical. For the half-century beginning with the attack on Pearl Harbor, California was the centerpiece of the American defense industry. Southern California in particular was a home base for much of the aviation industry even before World War II, but wartime and Cold War spending built up aviation and then aerospace to the point that they employed more Californians than any other industry. When the Cold War...

Bull Market for Stocks, Bear Market for Workers

Flickr/Michael Aston
Today the Dow Jones Industrial Average rose above 14,270 — completely erasing its 54 percent loss between 2007 and 2009. The stock market is basically back to where it was in 2000, while corporate earnings have doubled since then. Yet the real median wage is now 8 percent below what it was in 2000, and unemployment remains sky-high. Why is the stock market doing so well, while most Americans are doing so poorly? Four reasons: First, productivity gains. Corporations have been investing in technology rather than their workers. They get tax credits and deductions for such investments; they get no such tax benefits for improving the skills of their employees. As a result, corporations can now do more with fewer people on their payrolls. That means higher profits. Second, high unemployment itself. Joblessness all but eliminates the bargaining power of most workers—allowing corporations to keep wages low. Public policies that might otherwise reduce unemployment—a new WPA or CCC to hire the...

The Sequester: Now What?

flickr/Penn State news
flickr/Penn State news President Obama gambled that the threat of the automatic sequester of $85 billion in domestic and defense cuts would force the Republicans to accept major tax increases, and so far he is losing the wager. The Republican leadership, which was badly divided over the New Year’s deal that delayed the fiscal cliff, is now re-united around the proposition that Republicans will accept no further tax increases. So the president is left to court individual Republican House members to support loophole closures in exchange for the restoration of some popular domestic and military spending. But for the moment, Republicans got what they wanted—big spending cuts, party unity around no tax increases, and a weakening of a newly re-elected president. For Obama and the Democrats, there are three big risks going forward. First, the sequester slows down economic growth—cutting it in half this year from about 3 percent to 1.5 percent according to the Congressional Budget Office...

The Once and Future Gov

AP Photo/Eric Risberg
AP Photo/Eric Risberg A merica’s most futuristic governor seems borne back ceaselessly into the past these days. As he shows me around his office on a crisp winter morning, California Governor Jerry Brown points out not just the desk that his father, Edmund “Pat” Brown, used during his own term as governor from 1959 to 1967 but also photos of his grandparents and his great-grandfather, who came to California in the gold rush years. “He knew John Sutter,” Brown says. The only two governors in the past half-century who were native Californians, he points out, were he and his father. At 74, Brown has lost little of the intensity that impressed and occasionally discomfited voters during his first tenure as governor nearly 40 years ago. His outfit—an open-collar shirt under a white pullover sweater, blue jeans—may be West Coast casual, his shaved head may call to mind the Zen monks with whom he’s studied, but Brown’s emotional repertoire does not include laid-back, except when he’s talking...

Sequestration Nation and Remembering Robert Kennedy

Flickr/Kemon01
With the sequester now beginning, I find myself thinking about Robert F. Kennedy—and 46 years ago when I was an intern in his Senate office. 1967 was a difficult time for the nation. America was deeply split over civil rights and the Vietnam War. Many of our cities were burning. The war was escalating. But RFK was upbeat. He was also busy and intense—drafting legislation, lining up votes, speaking to the poor, inspiring the young. I was awed by his energy and optimism, and his overriding passion for social justice and the public good. (Within a few months he’d declare his intention to run for president. Within a year he’d be dead.) The nation is once again polarized, but I don’t hear our politicians talking about social justice or the public good. They’re talking instead about the budget deficit and sequestration. At bottom, though, the issue is still social justice. The austerity economics on which we’ve embarked is a cruel hoax—cruel because it hurts those who are already hurt the...

The U.S. Budget, By the Numbers

AP Photo/Ed Andrieski
AP Photo/Ron Edmonds I n the argument over the "sequester," the across-the-board cuts to both domestic and military programs that are about to take effect, everyone in official Washington seems to agree that the government's budget is bloated. Despite the economists telling us that this is still a terrible time for austerity (just look how well it has worked out for Europe), the argument between Republicans and Democrats seems to be whether we need to just slash the budget mercilessly, or slash the budget somewhat less and raise some taxes. But is the federal budget really so big? Let's take a look at some graphs. If you look just at raw dollars, it's true that the size of government has increased steadily in recent decades (there are a lot of reasons why that's the case). It's also true that spending went up at the beginning of the Obama administration, but it's important to understand why and how. The answer to why is simple: the Great Recession. When a recession hits, government...

The Five Most Terrifying Things about the Sequester

AP Photo/J. Scott Applewhite
The latest fiscal showdown concerns the “sequester”—across the board cuts to (almost entirely) discretionary spending that will total just over $1 trillion in the next decade, and which are set to take effect on March 1. What should those who have better things to do with their life than follow fiscal policy debates know about the sequester? 1. The sequester will hurt job-growth As we pointed out during the debates raging in the run-up to the “fiscal cliff," the sequester was the second-most damaging component of the austerity bundle set to take effect on January 1, 2013. The worst component was the non-renewal of the payroll tax cut, which is already dragging substantially on the economy . All told, if the sequester kicks in the economy will likely end the year with roughly 500-600,000 fewer jobs than if it were repealed. These are jobs the economy desperately needs . To be clear, the sequester alone won’t drive the U.S. economy back into outright recession, but it surely will make...

Lockheed, Stock, and Barrel

Do we truly need brand new aircraft carriers? Nope, but try telling the Pentagon and their many contractor friends.

AP Photo/Northwest Florida Daily News, Devon Ravine
AP Photo/Eric Talmadge This is the third in a three-part Prospect series on what an ideal military budget might look like. Read Part One on the military's current responsibilities here . Read Part Two on the real threats that our military should be protecting our country from here . W hat stops the United States from crafting a military budget that makes sense? As this series has shown, to defend Americans and to protect American economic interests—even if broadly defined—the military would need vastly less resources than it currently enjoys. Sure, people in our defense establishment will complain about "bloat" and "waste" and "inefficiency," but when it comes to actual cuts, they just aren't done. "Now's not the time," they say, and considering the harm that sequestration cuts will likely do to many people's jobs and possibly to our economic recovery, there might be something to it—but they always say that. So, why do conversations about possible—and advisable—cuts always end up a...

Trading The Blame Game for The Bully Pulpit

Flickr/Neon Tommy
The White House apparently believes the best way to strengthen its hand in the upcoming “sequester” showdown with Republicans is to tell Americans how awful the spending cuts will be and blame Republicans for them. It won’t work. These tactical messages are getting in the way of the larger truth, which the president must hammer home: The Republicans’ austerity and trickle-down economics are dangerous, bald-faced lies. Yes, the pending spending cuts will hurt. But even if some Americans begin to feel the pain when the cuts go into effect Friday, most won’t feel it for weeks or months, if ever. Half are cuts in the military, which will have a huge impact on jobs (the military is America’s only major jobs program), but the cuts will be felt mainly in states with large numbers of military contractors, and then only as those contractors shed employees. The other half are cuts in domestic discretionary spending, which will largely affect lower-income Americans. There will be sharp...

Threat versus "Threat"

The second entry in our series on how to fix the Pentagon budget

flickr/zennie62
AP Photo This is the second in a three-part Prospect series on what an ideal military budget might look like. Read Part One here . Read Part Three on what's keeping us from a more perfect military budget here. A bout a year ago, Army General Martin Dempsey went to Capitol Hill trying to defend $55 billion in annual budget cuts by sequestration. With a straight face, the Joint Chiefs of Staff chairman testified to a panel of the House Appropriations Committee: “In my personal military judgment, formed over 38 years, we are living in the most dangerous time in my lifetime right now ." It's the kind of thing that makes a person alternately question the judgment and the honesty of our military leaders. It's obvious nonsense , just another ludicrous statement in the campaign mounted by the military, industry, and Congress in their effort to fight sequestration. That said, Dempsey raises a good question: Do we live in a dangerous world? Are there threats out there that might be the sort of...

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