Economists for Peace and Security has issued the following statement on current budget debates, pointing out that the entire premise is false and that giving in to the demands to cut the deficit imperils fragile recovery. James K. Galbraith, along with Ken Arrow, Andrew Brimmer, Robert J. Gordon, is among the notable signatories.
FEDERAL SPENDING AND THE RECOVERY
A Statement by Directors, Trustees and Fellows of Economists for Peace and Security
Annandale-on-Hudson, New York - February 28, 2011 - The budget adopted by the House of Representatives on February 19, 2011 does not make economic sense and is likely to do more harm than good. First, the rationale for the measure is based on a false premise. Secondly, the budget cuts being proposed will impede and may end the recovery. If the recovery fails, unemployment will increase and the financial crisis could re-emerge.
The premise that the US government is broke is false. The US government has never defaulted and will not default on any of its financial obligations. Deficit spending is normal for a great industrial nation with a managed currency, and it has been our normal economic condition throughout the past century. History proves, and sensible economic theory confirms, that in recessions, increased federal spending -- not balancing the budget -- is the tried and true way to return to a path of sustained growth and high employment.
Eliminating waste in government spending is desirable. But that is not what the House proposes; indeed the House budget failed to address the largest waste in federal government, namely in the military, and the House failed to remove our most egregious subsidies, such as to oil companies. To adopt a policy of deep budget cuts at this stage of recovery is to surrender to irrational fears in the service of a political, not an economic, agenda.
As economists, as citizens, and as long-time critics of waste in government, we call on the Senate to reject the House proposal and to craft an alternative that places first priority on sustaining economic recovery and on dealing with the country's true economic and social problems, which include unemployment, home foreclosures, the fiscal crisis of states and cities, our infrastructure needs, energy security and climate change.
Current Signators*:
Clark Abt, Brandeis University and Cambridge College
Kenneth Arrow, Stanford University, Nobel Laureate
Marshall Auerback, Madison Street Partners
Barbara Bergmann, American University and University of Maryland
Linda Bilmes, Harvard University
Stanley Black, University of North Carolina
Andrew F. Brimmer, Brimmer & Co.
Kate Cell, Principal, Kate Cell Consulting
Lloyd Jeff Dumas, The University of Texas at Arlington
Gary Dymski, University of California, Riverside
James K. Galbraith, The University of Texas at Austin
David Gold, The New School
Robert J. Gordon, Northwestern University
Michael Intriligator, UCLA
Richard F. Kaufman, Bethesda Research Institute
Ann Markusen, University of Minnesota
Richard Parker, Harvard University
Dimitri B. Papadimitriou, The Levy Institute of Bard College
Gustav Ranis, Yale University
Kathleen Stephansen
Lucy Law Webster, Center for War/Peace Studies, New York
*Please note that affiliations are listed for identification purposes only.
Cross-posted from New Deal 2.0.
have read Jonathan Tasini's e-book.
This deficit/debt made-up crises is getting our eyes off the ball. The repubs are not interested in helping the economy but power. And the dems are bought and paid for . The MSM is lazy and the American public just loves their ideas made by commercials. :-( Doesn't look good.
Even a fifth grader would understand that cuts will amplify this recession.
I assume the GOP and DEM are as smart as a fifth grader, so there muct be some other reason for them to proceed with their folly.
I predict that if cuts are enacted, that by September or October, this country will be in a second dip perhaps as deep as the 2008 period.
States and cities will have raised taxes and fees to cover the short revenue from lost wage earners and their corporate gifts. The unemployment rate will still be around 9-10% but there will be 5-8million folks without any benefits nor any jobs. Housing will further collapse and wall street will be making billions.
The working class, especially the middle and poor will pay the brunt of the increases in taxes and fees, doing what the GOP has sought all along. Push the burden of the country economy onto them.
SOme cities and states will see food riots as well as increases in crime where cuts were made.
We are creating a dangerous country.
The most dangerous animal (human) is one who has nothing left to loose.
Mother, do you think they'll like this song?
Mother, do you think they'll try to break my balls?
Mother, should I build the wall?
Mother, should I run for President?
Mother, should I trust the government?
Mother, will they put me in the firing line?
Is it just a waste of time?
Hush now baby, baby, don't you cry
Momma's gonna make all of your nightmares come true
Momma's gonna put all of her fears into you
Momma's gonna keep you right here under her wing
She won't let you fly, but she might let you sing
Momma's will keep Baby cozy and warm
Ooo Babe, of course Momma's gonna help build the wall
Mother, do you think she's good enough
For me?
Mother, do you think she's dangerous
To me?
Mother will she tear your little boy apart?
Mother, will she break my heart?
Hush now baby, baby, don't you cry
Momma's gonna check out all your girlfriends for you
Momma won't let anyone dirty get through
Momma's gonna wait up until you get in
Momma will always find out where you've been
Momma's gonna keep Baby healthy and clean
Ooo Babe, you'll always be Baby to me
Mother, did it need to be so high?
---
ever wondered why there's no father in this song? Must have had something to do with that WWII thingy.
Depressing, isn't it?
Better to fund some good teachers instead. Even during peaceful times.