

Cuts And Consequences - How Budget Cuts Hurt the Economy

Tuesday, 13 March 2012 08:25 By Dave Johnson, Campaign for America's Future | Op-Ed
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Is smaller government really better for the economy?

Conservatives chant that taxes and government "take money out of the economy" and we need to "cut and grow," meaning if government spending is cut way back the economy will grow as a result. Europe's conservatives are also forcing cuts in the things their governments do for regular people, claiming "austerity" will bring "confidence" that grows their economies.


What Does Government Do?

Almost everything the government does is because it needs to be done. We need roads, bridges, schools and colleges, dams, courts, police and fire departments, water management, etc. (We can discuss the need for military spending another time.)



Who Is Our Government For?

In the United States, our Constitution says that government is supposed to be of, by and for We, the People. The country was established after the colonists rebelled against the aristocracy of England, a few people who had all of the wealth and power and would not let the colonists have a say in how things were run and who would benefit. So they fought the Revolutionary War and established a country where "We, the People" all have an equal say, and to "promote the general welfare." In other words, a country that aspires to be of, by and for the good of all of us.

So cutting back on government means cutting back on We, the People doing things for the good of all of us. It means cutting back on the things we have a say over. It means relinquishing the wealth and power that we hold in common to ... well, just where does our common wealth and power go if our government is cut back?

Medicare, For Example





Repeat, the Republican plan to cut Medicare would cost the larger economy seven times as much as it cuts governmentspending.

Social Security, For Example


Social Security allows working people to retire with at least a minimal income. If this is cut, many could not retire for many more years (if ever), which would increase the unemployment rate because their jobs would not open up. The same is true when the retirement age is increased: fewer job openings. If Social Security is cut, the spending (on cat food) at local grocery stores and other necessities is reduced by the same amount. And the effect on children of retirees is increased if they contribute to make up the difference.


Cutting Disease Control, For Example

One of the clearest examples of the way government helps us all, rich and poor, is the government's Center for Disease Control (CDC).


Budget Cuts Hurt The Economy

The above are only a few examples.

A government budget cut is like a huge tax increase on regular people because it increases what each of us pays for the things government does—or forces us to go without. This is because cuts in government spending don’t actually cut thecostor the need for those things, they just shift those costs onto the larger economy.




Austerity In Europe

Several countries in Europe are severely cutting budgets. The result is that the economies in those countries are slowing. Reuters reported in "Euro zone's slump in late 2011 points to recession".





Who Benefits From Cuts?



What We, the People Want


Plutocrats -- the 1%ers -- of course see all of these protections of regular people as hindering their power and ability to make as much for themselves as they can grab. Plutocrats just don’t see how public parks benefit them. They just don’t see why they should have to pay for public schools. What good do public schools do them, today? Plutocrats don’t see why it should be anyone else's problem if old people don’t have health care -- health care for seniors certainly isn't their problem.

They explain that things for anyone other than themselves and their interests just “wastes money.” Things for regular peopleare not their problem. And when plutocrats run government, it isn't their problem.

The fact is a public park “costs money.” Schools and infrastructure are just more “government spending.” Things like that just "redistribute income" because taxes on the income of plutocrats is used to build that park or school that anyone can use. The basic message of the plutocrat is, "Why should I pay for anything that benefits you?"


What We, The People Need


Understand what is going on here. Demands for budget cuts and austerity are really about shifting from democracy to a system where regular people -- the 99% -- are on their own, up against the wealthy and powerful. This is about shifting from a system where regular people can be prosperous together, to a system where a few -- the 1% -- have all the wealth and power.


Dave Johnson



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