We’re Not Broke — We’ve Been Robbed

Slashing government spending now is just going to make our nation poorer.

By Richard Kirsch

Richard_Kirsch

With the Friday the 13th December deadline for a federal budget deal, the cries of “we’re broke,” and “we can’t afford to keep spending,” are ringing again. But we’re not broke and acting like we are is making us poorer.

One of the biggest common misunderstandings is that governments are like households, which need to tighten their spending when times are tough. Actually, governments and households work in opposite ways.

Attack of the Budget Slashers, an OtherWords cartoon by Khalil Bendib

Governments can and should spend more when times are tough. Government spending makes up for lack of spending by families and businesses, and it helps get the economy moving by getting people back to work, putting money in their pockets, and contracting with businesses.

If we needed a reminder of that, the recent government shutdown gave us one. Journalists reported story after story about how business was down, as federal workers were laid off and national parks closed. The estimates are that even though the shut down only lasted 16 days, it cost the economy $24 billion.

We need government spending and investment to get the entire economy moving forward. When families are back at work with decent wages, government tax revenues will rise and spending on social supports will fall. That’s when government can reduce spending without slowing down the economy.

During the past two years we’ve reduced the deficit by half, close to 2008 levels. That may sound like it’s a good thing, but it’s really the biggest reason the economy is so lackluster for the vast majority of Americans with a near-record-high in unemployment, stagnant wages, and a smaller proportion of Americans working than any time in the past 30 years.

We’ve also cut all the wrong things: spending that puts money in people’s pockets today and investments in our economic future. We’ve cut spending on education, unemployment insurance, environmental protection, and scientific research. Our public investment, which includes annual government programs and spending on roads, bridges, transit, research, and development is actually the lowest it’s been as a share of the economy in 60 years.

What if we’d taken a different course during the recession? How about rather than cutting spending after an initial stimulus, which avoided a second great depression by saving three million jobs, the government had kept at it?

History shows that if we have continued the levels of spending normally done after recessions, we would have spent some $800 billion more than we did, and the overall economy (and not just the stock market) would be back to the same level today that it was before the recession hit.

In short, the argument that the government must live within its means to protect our children’s future is backwards. Averting deficit spending now means starving our children’s present and their future. More parents will have to struggle to get by, fewer good jobs will be created, education will suffer, and today’s college students will stumble into their careers saddled with huge debt loads.

And our infrastructure will keep crumbling and research will dwindle, making it harder for our businesses to compete in the global marketplace.

There are ways we can reduce the deficit without slowing down the economy very much, if at all. That is by looking at the other truth about the cry that “we’re broke.” In fact, we have been robbed.

When Uncle Sam gives big corporations tax breaks to move jobs overseas, we’ve been robbed. When Washington taxes billionaires at a lower rate than their secretaries, we’ve been robbed.

To get the country moving again, Congress needs to reverse direction and increase spending on vital services and investment.

That means reversing the budget cuts on domestic spending already in place and stopping any more sequestration cuts on vital services for our families. And raising taxes on the wealthy and huge corporations, which have been gaming the system at our expense.

Instead of obsessing about the “need” to cut government spending, our leaders should be figuring out how best to stimulate the economy to provide both a better today and future for our children.


Richard Kirsch is a senior fellow at the Roosevelt Institute and the author of Fighting for Our Health: The Epic Battle to Make Health Care a Right in the United States. He’s also a senior adviser to USAction. USAction.org.  Distributed via OtherWords. OtherWords.org.  Cartoon Credit:  Attack of the Budget Slashers, an OtherWords cartoon by Khalil Bendib.

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Three Controversial Bain Decisions That Happened Before Romney Left

By Rebecca Leber posted from ThinkProgress Politics on Jul 2, 2012 at 1:23 pm

The Romney campaign has deflected criticism of the former governor’s business record as head of Bain Capital by insisting that he cannot be held responsible for its actions following his departure in February of 1999. However, SEC documents unearthed by Mother Jones directly contradict the campaign’s assertion that Romney broke all ties with Bain after he left to head the 2002 Salt Lake City Olympics. The SEC filings show that Romney retained “share voting and dispositive power” over at least some of it activities after November of that year and played a role through at least the end of 1999.

Indeed, the Boston Herald reported in February of that year that Romney didn’t leave the company entirely, but merely took a leave of absence and would “stay on as a part-timer with Bain, providing input on investment and key personnel decisions.” A press release confirmed this arrangement, noting that Romney was “currently on a part-time leave of absence.”

Romney, in other words, may have been involved in decisions that the campaign would rather voters forget. These include:

  •  Medical-waste firm disposing aborted fetuses. Bain Capital invested $75 million in the medical-waste disposal firm Stericycle, a target for anti-abortion groups for disposing aborted fetuses. The company had a record of safety violations, including a fine for “knowingly exposing workers to life-threatening diseases.” SEC filings name Romney as an individual who holds “voting and dispositive power” with respect to the stock owned by Bain.
  •  Firms offshoring jobs to low-wage countries. Bain Capital was the largest shareholder in Modus Media, which specialized in helping companies outsource their manufacturing. Bain became the majority shareholder in Stream International in 1999, which set up call centers overseas. The campaign’s defense was that Romney had left Bain in February of that year, but he clearly still retained ties to the firm.
  • Loading a company with massive debt and causing it to cut 367 jobs. After purchasing Dade in the early 1990s, Bain “pushed Dade to borrow hundreds of millions of dollars” in April 1999. Dade bought half of Bain’s shares in the company, which led to layoffs that year and bankruptcy in 2002. It’s unclear to what extent Romney waas involved in the deal, but he was still advising Bain at the time.

Romney himself had claimed that he left the company in February of 2009. “Mr. Romney retired from Bain Capital on February 11, 1999 to head the Salt Lake Organizing Committee. Since February 11, 1999, Mr. Romney has not had any active role with any Bain Capital entity and has not been involved in the operations of any Bain Capital entity in any way,” he wrote in an Office of Government Ethics report.


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Source: http://thinkprogress.org/politics/2012/07/02/509624/three-controversial-bain-decisions-that-happened-before-romney-left/