The Biggest Losers

http://nyti.ms/1e945M2

The pundit
consensus seems to be that Republicans lost in the just-concluded
budget deal. Overall spending will be a bit higher than the level
mandated by the sequester, the straitjacket imposed back in 2011.
Meanwhile, Democrats avoided making any concessions on Social
Security or Medicare. Call this one for Team D, I
guess. 

But if Republicans arguably lost this
round, the unemployed lost even more: Extended benefits weren’t
renewed, so 1.3 million workers will be cut off at the end of this
month, and many more will see their benefits run out in the months
that follow. And if you take a longer perspective — if you look at
what has happened since Republicans took control of the House of
Representatives in 2010 — what you see is a triumph of
anti-government ideology that has had enormously destructive
effects on American workers.  

First, some
facts about government
spending

One of the
truly remarkable things about American political discourse at the
end of 2013 is the fixed conviction among many conservatives that
the Obama era has been one of enormous growth in government. Where
do they think this surge in government spending has taken place?
Well, it’s true that one major new program — the Affordable Care
Act — is going into effect. But it’s not nearly as big as people
imagine. Once Obamacare is fully implemented, the Congressional
Budget Office estimates that it will add only about 3 percent to
overall federal spending. And, if you ask people ranting about
runaway government what other programs they’re talking about, you
draw a blank. 

Meanwhile, the actual numbers show that
over the past three years we’ve been living through an era of
unprecedented government downsizing. Government employment is down
sharply; so is total government spending (including state and local
governments) adjusted for inflation, which has fallen almost 3
percent since 2010 and around 5 percent per
capita. 

And when I say unprecedented, I mean
just that. We haven’t seen anything like the recent government
cutbacks since the 1950s, and probably since the demobilization
that followed World War II. 

What has been
cut? It’s a
complex picture
, but the most obvious cuts have been in
education, infrastructure, research, and conservation. While the
Recovery Act (the Obama stimulus) was in effect, the federal
government provided significant aid to state and local education.
Then the aid went away, and local governments began letting
go of hundreds of thousands of teachers
.
 

Meanwhile, public investment fell
sharply — so sharply that many observers refer to it as a
“collapse” — as state and local governments canceled transportation
projects and deferred maintenance. Researchers, like those at the
National Institutes of Health, also
took large cuts
. And there was a
major cut in spending on land and water
conservation

There are three
things you need to know about these harsh
cuts. 

First, they were unnecessary. The
Washington establishment may have hyperventilated about debt and
deficits, but markets have never shown any concern at all about
U.S. creditworthiness. In fact, borrowing costs have stayed at
near-record lows throughout. 

Second, the
cuts did huge short-term economic damage. Small-government
advocates like to claim that reducing government spending
encourages private spending — and when the economy is booming, they
have a point. The recent cuts, however, took place at the worst
possible moment, the aftermath of a financial crisis. Families were
struggling to cope with the debt they had run up during the housing
bubble; businesses were reluctant to invest given the weakness of
consumer demand. Under these conditions, government cutbacks simply
swelled the ranks of the unemployed — and as family incomes fell,
so did consumer spending, compounding the damage.
 

The result was to deepen and prolong
America’s jobs crisis. Those cuts in government spending are the
main reason we still have high unemployment, more than five years
after Lehman Brothers fell. 

Finally, if you
look at my list of major areas that were cut, you’ll notice that
they mainly involve investing in the future. So we aren’t just
looking at short-term harm, we’re also looking at a long-term
degradation of our prospects, reinforced by the corrosive effects
of sustained high unemployment. 

So, about that
budget deal: yes, it was a small victory for Democrats. It was
also, possibly, a small step toward political sanity, with some
Republicans rejecting, provisionally, the notion that a party
controlling neither the White House nor the Senate can nonetheless
get whatever it wants through
extortion. 

But the larger picture is one of years
of deeply destructive policy, imposing gratuitous suffering on
working Americans. And this deal didn’t do much to change that
picture. 


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