Thursday, February 24, 2011

Don't Believe Me -- Believe Goldman Sachs

Don't even believe Treasury Secretary Tim Geithner when he says the GOP budget cuts would cost jobs.

Now, no less an authority than Goldman Sachs -- not exactly a paragon of progressive politics -- says the GOP budget cuts would do real harm to the economy.

Then again, Goldman Sachs has had its own problems.

But still, how come we can't find any economists who think slashing the budget just for the sake of slashing the budget, without principled policy-based reductions, will be good for the economy? Jennifer


  1. I know all this stimulus, TARP, etc sure didn't help the economy any. So it makes sense that people would think to do the opposite of what's NOT currently working, right?

  2. Miss Diagnosis, What analysis and/or statistics are you using to arrive at your assumptions?
    Do you think it's fair to just say it's so, because you have a particular political agenda?

    Basic economics and history show that cutting spending slow an economy. Review times lines and historic facts from the great depression and you'll learn that each time spending was cut, the economy slipped and more became unemployed. The New Deal put Americans to work, so they had money to spend, to assist in keeping the economy moving.

    During the 30's almost 10,000 banks failed, TARP was an effort to keep financial markets and banks stable. It worked, although at a cost to American tax payers. Even if you don't like TARP and most of us don't, it was effective.

    The stimulus gave you tax credits for the last 2 years and reduced your federal income tax. It provided other tax benefits for small business, thus keeping many from failing. It provided infrastructure improvements and jobs in industry that worked on roads, bridges and such. It may not have kept unemployment at 8%, but it did help manage it at 10% of below. In the great depression unemployment soared as high as 25% average across the country and higher in some parts of the US. Other countries unemployment soared as high as 40-50%. Because the US and other countries around the world came together and passed stimulus packages, unemployment did not soar as high as it did during the great depression.

    Many economists say the stimulus didn't go far enough, which is why unemployment reached 10%. Many say we need another stimulus to keep the economy moving as we continue to manage the economic crisis.

    Clearly you can see that if you reduce take home pay of working Americans, they have less to spend, thus this effect the economy of communities? Therefor, cutting income of public workers, increasing health insurance costs of workers, means less dollars to spend. What would you do if your health insurance costs suddenly doubled, or even tripled? You'd forgo a purchase and that can only mean the person who is employed to make the item you're not buying probably has reduced hours, which means he's not buying something and it just keeps snowballing.

    Most of the Republican cuts are in services which means thsoe providing the services are experiencing cuts, not to mention the loss of services and how that effects those in need. We have needy people in this country and every dollar they get in entitlements goes immediately back into the economy. They spend it before it even hits their bank account. Cut back on their income, the economy is effected.

    Please consider thinking beyond frustration, anger and politics. Think about how you would react if your income should suddenly drop. There needs to be a balance in what's cut, based on what is needed to keep the economy moving, while also reducing budgets.

  3. Here's a partial list of Republican budget cuts. Which you'll see effects predominantly the poor, women, children, sick and disabled. Is this shared sacrifice when the wealthiest of this country received huge tax breaks? I don't think so. I'm still asking -- what was the sacrifice of the wealthy? What have they done to help prop up the country during these difficult times? Where are the jobs, the continued tax breaks are supposed to create?

    $747.2 million from WIC. WIC is the "Special Supplemental Nutrition Program for Women, Infants and Children." It safeguards low-income women, infants and children up to age 5 by providing nutritious foods to almost 9 million recipients each month (in FY 2008). Of the 9 million beneficiaries, 4.33 million are children, 2.22 million are infants and 2.15 million are women.

    · $1.1 billion from Head Start. Head Start gets children ready for school with educational, health, nutritional and other social services. During the 2008-09 fiscal year, 11.5 percent of Head Start enrollees were children with disabilities – mental retardation, hearing impairments, emotional disturbances.

    · $50 million from Maternal and Child Health Block Grant. MCHB helps immunize children against diseases, reduce infant mortality and provide mothers with access to prenatal care.

    · $110 million from Teenage Pregnancy Prevention Community Grants.

    · $49.3 million from Mentoring Children of Prisoners.

    · $390 million from the Low Income Home Energy Assistance Program. LIHEAP helps "those with the lowest incomes that pay a high proportion of household income for home energy, primarily in meeting their immediate home energy needs." LIHEAP helps keep granny from freezing.

    Of course, this short list doesn't include severe cuts to any number of other domestic programs that benefit all Americans – $557 million from a program that ensures safe drinking water and $100 million from the FEMA Emergency Food and Shelter program. And of course, public education takes a beating.

    Some of the cuts would shift costs to states. The proposal would save an estimated $16.1 billion by rolling back federal Medicaid funding, putting the burden for those patients on state and local governments instead.