2011/09/14

Blue Dogs and the budget

A Blue Dog Democrat said:


"...we've got to get our fiscal house in order," Shuler said. "We're at 15 percent of GDP in revenue and 24 and a half percent of expenditures. You want to take that 15 percent to 13 percent and increase spending to 27 percent.... I've ran a business, that doesn't go good on my balance sheet. I'm in the red when that happens."

The Center for Budget and Policy Priorities agrees with these percentages and also points out that the US is spending nearly half a trillion dollars on safety net programs. Where does our Blue Dog intend to make a cut so that our budget goes down from 15% to 13%? The safety net programs are a pretty tempting target because safety net money normally goes to constituents that don't write big checks to politicians, that the politicians then spend on re-election campaigns.

Well, aren't there expensive programs that everybody agrees aren't all that useful? Back in 1981, President Reagan's first year in office, there were a few small cuts that everybody could agree on. The US was publishing an estimate every year of how much coal remained in the ground. The estimate ran into the hundreds of years worth. That publication was canceled. Problem was, despite the Golden Fleece Award given out by former Senator William Proxmire (D-WI) from 1975 to 1988, there just wasn't much of what politicians refer to as "low-hanging fruit," so after mid-1981, there simply haven't been any serious budget cuts.  There was a slogan that David Stockman, Reagan's first Budget Director, liked to cite "We're against weak claims, not weak clients." Great slogan, but one that was very difficult to stick with in practice, because those who write big checks for re-election campaigns have a pretty powerful and persuasive voice when it comes to budget priorities.

It's far from clear where Blue Dogs want to make cuts in the budget, but it does appear pretty clear that their preferred route is not to get more Americans employed, but to slash expenditures. As the Daily Kos piece says, what the Blue Dogs want is "not just bad politics, it's bad policy." The essential problem that Blue Dogs don't appear to understand is that the government is not a business.

Governor Rick Scott of Florida (R), tried to run Florida's government as though it was just another private, for-profit corporation and quickly learned that

The inclination is to give a new governor the benefit of the doubt and let him settle into office a bit. Scott squandered that with his arbitrary decisions and disregard for other institutions, including the Cabinet, Congress, the voters and the media.

Scott is used to running an enterprise as a one-man show, where he's not answerable to anyone. State governments don't work that way and there's no reason they ever should. It's extremely important to remember:

Democratic Government is not structured to make a profit. It's job is to spend the pooled contributions of the citizens (taxes) to provide services to those citizens - health, education, defense, infrastructure. There is no profit, as we, the People, are supposed to run this country, and are not selling these services to ourselves.

It's simply a contradiction for the Democratic Party to include Blue Dogs, who just don't appear to understand this. There's a very strong argument that the Democratic Party has been too much of a big tent party and that it needs to shrink down by kicking all of their Blue Dog Democrats out. Let those guys form their own party. Will that make Democrats a minority? Probably, yes. The advantage, however, is that Democrats would speak with one, consistent and unified voice. In contrast, what we have is a party where someone says something like this:

I am a former prosecutor. I put people in the electric chair. I have a gun. I believe in capital punishment. I believe in this war on terror. And I'm a Democrat.

As Digby says:

According to this fellow, I'm not a member of the Democratic Party and nobody gives a damn what I think. I get that, and I believe it. But considering his list of identifiers there, the real question is, why is he?

As to the policy front, the contractionary austerity policies that Blue Dogs appear to favor is opposed by no less an institution than the International Monetary Fund (IMF). As an anti-globalizer, (A popular policy position in the 1990s-early 2000s, it's very highly skeptical of the financial sector and strongly suspects that the MOTUs don't really know what they're doing, but capitalism is far from dead or useless) is a political position that I strongly identify with and the IMF has long been a e-e-evilll boogeyman to the anti-globalization movement, so I thought it was very interesting to see the IMF put out a very useful and informative study of contractionary policies. The IMF looked at 173 instances in 17 countries to gauge the effectiveness of contractionary or "consolidation" policies.

The challenge facing the United Kingdom and many advanced economies is how to bring debt down to safer levels in the face of a weak recovery. Will deficit reduction lead to stronger growth and job creation in the short run?
Recent IMF research provides an answer to this question. Evidence from data over the past 30 years shows that consolidation lowers incomes in the short term, with wage-earners taking more of a hit than others; it also raises unemployment, particularly long-term unemployment.

In other words, no, contractionary policies are pretty worthless. The IMF was unable to identify any positive results from those 173 instances. The recent orgy of budget-cutting in the US has been followed by an economic downturn, with employment gains going flat. There's nothing mysterious or coincidental about that. One led very directly to the other.


Seriously, there's absolutely no reason for liberal Democrats to do anything to keep Blue Dogs in the party.

1 comment:

WISPR said...

Blue Dog "for a balanced budget amendment" requires a constitutional amendment that would require Congress to pass a balanced budget for the federal government each year.