Reports that the economy shrunk in the last three months of 2012 -- largely due to so-called austerity measures -- is not only bad news for the country: It could be terrible news for the tens of thousands of New Yorkers who depend on the social safety net just to make ends meet.
As Robert Creamer wrote on The Huffington Post, "the idea that the best response to an economic downturn is to 'tighten our belts' and slash critical government spending that we 'no longer can afford'" is actually toxic in terms of righting the economy.
The newspapers and Internet have been full of stories about how the Gross Domestic Product shrank in the last quarter, even though consumer spending and business investment increased and the housing market got better. The reason for the downturn is that there was a steep drop in federal spending.
That seems like proof to me that more cuts mean a worse economy. Congressional Republicans want to slash spending -- including things like Medicare, Medicaid and other essential programs. Spending cuts won't grow the economy. What we need are more jobs to increase consumer spending even more and get the economy going. By reducing unemployment, we lower government spending -- namely on unemployment benefits. And, at the same time, folks with jobs pay taxes -- and help reduce the deficits.
White House Press Secretary Jay Carney hit the nail on the head when he said economic threats during "fiscal cliff" negotiations prevented important defense spending. "Our economy is facing a major headwind, and that's Republicans in Congress," Carney said, adding that spending cuts were partly due to the threat of sequestration -- across-the-board spending cuts if a long-term deficit deal is not reached. "This is political brinkmanship that results in one primary victim. That's American taxpayers and the American middle class."
That's for sure.
Just last week, community groups in cities around the country held a nationwide day of action demanding that Congress not cut social safety net programs like Medicaid and Medicare in the name of austerity.
In New York, demonstrators marched from General Electric's 30 Rockefeller Center headquarters to the Debt Clock on 44th and 6th Avenue, where they displayed their own debt clock, showing the amount of money corporations and the wealthiest Americans should pay the federal government in taxes. The group noted that General Electric CEO Jeffrey Immelt is member of the Fiscal Leadership Council of the "Fix the Debt" campaign, a coalition of tax dodging corporations and wealthy Americans, who would rather cut necessary social service programs than pay their fair share.
With a budget of $60 million -- mostly coming from big corporations such as Bank of America, Honeywell and Citigroup -- "Fix the Debt" consists of more than 90 corporate CEOs, current and former elected officials (Democrats and Republicans) and prominent lobbyists united in an effort to gut our social insurance programs while protecting tax breaks for companies that ship jobs overseas.
Many seniors and retirees addressed the crowd and told how big cuts would hurt them.
"Cutting Social Security and Medicare would essentially take away my income," said Mary Gresham, of the Bronx, a retired nurse, and an 1199 SEIU United Health Care East member. "Cuts would mean I couldn't cover my medications, medical bills, or rent, and I'd have to rely on my children and grandchildren for help."
There are tens of thousands of stories like hers in New York City, and millions upon millions across the county.
We shouldn't be thinking about hurting these people, hard-working or retired folks at the lower end of the 99 percent. Instead Congress should follow President Obama's lead and enact legislation calling for more spending on infrastructure, a tax cut for companies that hire new workers, more aid to state and local governments and a program to rebuild schools. We also should think about treating all income the same -- so capital gains income is taxed at the same rate as paycheck income, and recapture the stock transfer tax, which would generate some $16 billion for New York State.
Simply put, the answer is not spending cuts that hurt the economy and slash social programs. The answer is creating more good jobs, raising the minimum wage and make making the fat cats in the top 1 percent pay their fair share.