The people protesting in Brazil won a small victory through their actions but it appears the government nixing the rate hike will not be enough to stop calls for change. It seems the people and the government have different priorities at the moment relating to the money Brazil is spending in preparation of hosting next year’s World Cup. From the article:
The target of the protests quickly widened to include corruption and excessive government spending on hosting football tournaments instead of on health, education and other public services.
How strange that people would want the government spending money on areas that would help the country in the long term instead of primping it for a few soccer matches next year? I suppose they prefer silly things like knowing how to read and being alive longer over the all important World Cup. Don’t they know how shiny it is?
I’m kidding, of course, as it is great to see these protests carry on and hopefully we will see even more people getting out and showing their priorities to the government. It would be a powerful sign to the world if Brazilians can push to their government to spend more on social spending instead of using money on soccer stadiums.
One of the better articles and the best chart from the Congressional Budget Office I’ve seen concerning the fiscal cliff and the effect it will have on jobs. The most important factor to note here is the difference in jobs with the two different Bush tax cuts options. We’ve been led to believe by the GOP that the tax cuts for the alleged “job creators” (a.k.a. the wealthy but not technically job creators in the U.S.) are critical and our economy cannot move on without them. But, as the author of this article puts it, “Washington is haggling over the least stimulative part of the fiscal cliff — the Bush tax cuts for the rich” (emphasis added). Obviously, Republicans are showing they are not serious about deficit reduction as they continue to block this maneuver. The question now becomes: will the GOP cause another recession just to get their way on the most insignificant part of the fiscal cliff debate?
The “fiscal cliff” is coming and there is little doubt something must be done to avoid the damage it may do to the economy. But one important reality should be noted about how we get out of a recession: government spending plays a huge role and it can be utilized to get the economy moving again. As noted in the article:
Many economists think every dollar of deficit reduction will subtract nearly the same amount from economic growth.
By that measure, the current course could cause the economy to contract by 0.5 percent in 2013, according to estimates by the Congressional Budget Office (CBO) that have been largely embraced by Wall Street and the U.S. Federal Reserve.
But research by economists in academia and at the International Monetary Fund suggests a dollar of deficit reduction could drain as much as $1.70 from the economy, making the prospective belt tightening much more dangerous.
Considering the economic facts of history, we know cuts to government spending, such as the type the Republicans in Congress and Mitt Romney are calling for, will impede the way out of our current economic downturn. This would be downright devastating to an unemployment rate that is still progressing its way down to more healthy levels. The truth is we need government spending and we have to bite the bullet on the current deficit levels it is creating until a more stable time comes where cutting areas of the budget are less damaging to the country.
And despite this reality, half of the voting public are still supporting the candidate most likely to cause even more economic devastation in our lives (with very little effect on his financial well-being and his wealthy supporters). One must ask, how fiscally suicidal are we?
A good, quick article that puts public spending on PBS into perspective and, once again, states the reality that it is an extremely tiny portion of the federal budget. The conservative claim that cutting this will bring about a vast change in the deficit is pure fantasy and it helps to continue pointing this out for the good of discourse.
A good but very generalized argument against the amount of spending cuts proposed by the Paul Ryan budget. An important fact to keep in mind from the piece:
According to the World Bank, government spending minus health care was already lower in the United States than in all of the European Union, Japan, China, and India in 2009, the latest year with comprehensive figures.
Many people probably think the opposite is true with the perception of the bloated United States’ government but it simply isn’t reality. What level of spending is best is arguable and some great points are made by Altman on this but one thing is clear judging from history. The government can contribute to some areas of the economy in a more efficient and better way than leaving it to the forces of the market. We should always recognize that and know we will need certain areas run by the government in the interest of society as a whole or we will lose something we currently take for granted, whether it is security, transportation efficiency, safe food, etc.
Some interesting numbers to look at but a few things should be kept in mind. The aggregate stats given are a bit deceptive, for instance this quote:
The survey found 90 percent of respondents supporting some blend of those two methods of reducing deficits (vaguely similar to Obama’s proposal), while Romney’s espousal of “revenue neutral” tax reform lines up most closely with the 9 percent of economists in the survey who called for “spending cuts only.”
Not all of that 90% are advocating the plans of Obama but it should be noted the majority of these experts are in favor of this road to economic stability.
The other factor that should be noted is the reality this is not a survey of either candidate’s exact plan for government spending. For instance, it only mentions tax increases which implies a tax increase on everyone and not just the wealthy as Obama has pushed for. In all likelihood, the numbers would be greater in favor of the Obama plan if that was accounted for since there is a majority call for more revenue through taxation and these experts would be fully aware of the myth of the “trickle down theory”.
The IMF is now warning the United States not to implement drastic spending cuts in the face of such a slow economic recovery. In other words, stay away from the austerity programs that have gotten European countries in so much trouble financially. This means bad news for Obama since the economy is not going to recovery very quickly (but will continue a recovery). And this is even worse news for Romney since his proposed cuts in spending will only make matters worse for the U.S. and world economy (hence the IMF’s concern with what we are projecting to do). The question now becomes will our leaders listen to the experts this time or will their advice be ignored in the interest of winning votes despite the awful forecast for those measures?