Economist's Fodder for Dems: $61 Billion Cut Would Cost 700K Jobs
by Eric Wasson
The Hill: Monday, February 28, 2011
A new report out Monday from Moody's Analytics economist Mark Zandi
estimates that the House-passed seven-month spending bill, which cuts $61
billion in spending, would cost 700,000 jobs by the end of 2012.
He predicts that this year the bill could cost 400,000 jobs and run the risk
of a new recession.
Zandi estimates that the CR would reduce real growth in gross domestic
product by 0.5 percent in 2011 and by 0.2 percent in 2012.
Congressional Democrats will be sure to cite new estimate as they argue
against cuts to spending this year.
House Republicans argue that their bill should become law as part of a "cut
and grow" strategy that they say, by removing uncertainty about higher taxes
to pay for government spending, would spur spending by businesses.
A spokesman for House Speaker John Boehner (R-Ohio) discredited Zandi.
"The fact that a relentless cheerleader for the failed 'stimulus' - which
the Democrats who run Washington claimed would keep unemployment below eight
percent - refuses to understand that ending the spending binge will help the
private sector create jobs is sad, but not surprising," said Boehner
spokesman Michael Steel.
Zandi, who backed the 2009 Obama stimulus plan, also concludes that allowing
the spending fight to cause a lengthy government shutdown would do deep
damage to the economy.
"The economy is much improved and should continue to gain traction, but the
coast is not clear; it won't be until businesses begin hiring aggressively
enough to meaningfully lower the still-high unemployment rate. The economy
is adding between 100,000 and 150,000 per month - but it must add closer to
200,000 jobs per month before we can say the economy is truly expanding
again," he argues.
"Imposing additional government spending cuts before this has happened, as
House Republicans want, would be taking an unnecessary chance with the
recovery," he states.
Zandi's report echoes one by the left-leaning Economic Policy Institute,
which concluded the GOP bill would cost 800,000 jobs. Goldman Sachs has
found that it could cause as much as a 2 percent loss in economic growth.
He argues that long-term deficits need to be tackled, but that government
borrowing is not crowding out private investment at this point, so reducing
spending would not have the effect of quickly expanding credit for the
private sector.
Zandi tells investors that he predicts both sides will find a compromise
that cuts less than House Republicans are demanding, and that the economy
will be able to absorb that compromise.
© 2011 The Hill
http://www.commondreams.org/view/2011/02/28-1
Wisconsin Is Making the Battle Lines Clear in America's Hidden Class War
The brazen choices of the Republican governor shows the real ideology behind
attacks on unions - in the US and beyond
by Gary Younge
The Guardian/UK : Monday, February 8, 2011
You can tell a great deal about a nation's anxieties and aspirations by the
discrepancy between reality and popular perception. Polls last year showed
that in the US 61% think the country spends too much on foreign aid. This
makes sense once you understand that the average American is under the
illusion that 25% of the federal budget goes on foreign aid (the real figure
is 1%).
Similarly, a Mori poll in Britain in 2002 revealed that more than a third of
the country thought there were too many immigrants. Little wonder. The mean
estimate was that immigrants comprise 23% of the country; the actual number
was about 4%.
Broadly speaking, these inconsistencies do not reflect malice or wilful
ignorance but people's attempts to make sense of the world they experience
through the distorting filters of media representation, popular prejudice
and national myths. "The way we see things is affected by what we know and
what we believe," wrote John Berger in Ways of Seeing. "The relation between
what we see and what we know is never settled."
When it comes to class, Americans have long seen themselves as potentially
rich and perpetually middling. A Pew survey in 2008 revealed that 91%
believe they are either middle class, upper-middle class or lower-middle
class. Relatively few claim to be working class or upper class, intimating
more of a cultural aspiration than an economic relationship. Meanwhile, a
Gallup poll in 2005 showed that while only 2% of Americans described
themselves as "rich", 31% thought it very likely or somewhat likely they
would "ever be rich".
But trends and ongoing events are forcing a reappraisal of that self-image.
Social mobility has stalled; wages have been stagnant for a generation. It
is in this light that the growing resistance to events in Wisconsin must be
understood. The hardline Republican governor, Scott Walker, has pledged to
remove collective bargaining rights from public sector unions and cut local
government workers' health benefits and pension entitlements.
As the prospect of becoming rich diminishes, many are simply trying not to
become poor. Inequality of income and wealth has been more readily accepted
in the US because equality of opportunity has long been assumed. The absence
of the latter raises serious questions about the existence of the former.
This tension brought thousands to the streets in all 50 states to support
the Wisconsin unions last weekend.
For Walker's measures to pass, a certain number of local senators must be
present in the chamber for the vote. To prevent that happening, the entire
Democratic delegation fled the state and is refusing to return until Walker
agrees to negotiate. Meanwhile, thousands of pro-union demonstrators have
descended on the state capital to protest, sparking solidarity rallies
nationwide.
Polls suggest the public is siding with the unions locally and nationally. A
survey last week showed 53% against cutting benefits and pay for government
workers and 61% opposed to removing collective bargaining. Even conservative
polls suggest a majority in Wisconsin is opposed to Walker's attempt to
eliminate collective bargaining.
Coming so soon after Republican electoral victories at federal and state
level, Walker might have anticipated an easier ride for his agenda than
this. After all, membership of unions is at an all-time low and public
support for them does not fare much better. Moreover, support for unions
ordinarily falls when unemployment rises. But these are no ordinary times.
For if organised labour has fallen out of favour, the illusion that you can
make it on your own is not far behind. A Pew survey in 2008 - before the
banking system imploded - showed that fewer Americans than at any time in 50
years thought they were moving forward in life. The number of those who
don't believe you can get ahead by working hard has doubled in 10 years.
Half the country thinks its best days are behind it. While many may question
the role of the unions, few believe firing 12,000 government workers, as
Walker has pledged to do, is the answer.
Walker's case is as predictable as it is weak. Government workers, he
claims, have higher pay and better benefits than others in a bloated state
that must slim down if it is to keep running. This is hardly true.
Accounting for age and education, US local government employees earn 4% less
than their private sector counterparts. Yes, the shortfall in pensions is
real. But if the political will existed, calamity could be avoided with a
fairly modest increase in the budget allocation. Union members do generally
enjoy better benefits. That's the whole point of being in a union: to
improve your living standards through collective action. And that is
precisely why Republicans like Walker want to crush them.
His agenda has nothing to do with redressing a fiscal imbalance and
everything to do with exploiting the crisis to deliver a killer blow to
organised labour. If fixing the budget deficit were really Walker's
priority, he would not have waved through $140m in tax breaks for
multinationals or refused to take federal funds for transport or broadband
development. Like 10 other states, he might even have raised taxes
progressively.
None of these contradictions are particular to Wisconsin. Similar stories
could be told as far away as Ireland and as nearby as Indiana, where
Democrats also fled the state to defeat a union-bashing bill. Nor are they
coming exclusively from the hard right. Democrats in the US and social
democrats around Europe are attacking unions too, albeit with less relish.
What Wisconsin does offer is a transparent illustration of the ideological
sophistry and political mendacity driving these attacks.
But having started this fight in such a brazen manner, Walker has little
option but to pursue it to its bitter end. That is why it has taken on
national significance. Faced with an existential threat, the labour movement
has broadened its horizons and galvanised a pluralistic, national
opposition. That is a precondition for success but by no means a guarantee.
Last weekend's demonstrations do not necessarily reflect a new sense of
class consciousness, but they do suggest the potential for it. The idea of a
class system where only a handful can ever be truly wealthy intrudes
awkwardly on a culture rooted in notions of self-advancement, personal
reinvention and rugged individualism, even if it is closer to reality. Old
habits die hard. The weekend protests were organised under the banner "Save
the American Dream".
Democratic politicians, funded by both unions and corporations, pretend not
to take sides, casting the national conversation not in terms of bosses and
workers or wages and profits but of rich and poor.
The problem with this, explains Michael Zweig, the director of the centre
for the study of working-class life at the State University of New York, is
that "most people want to be rich and most of them don't know what rich is.
If you put class in terms of power, you start to get to the source of the
problem."
Leaders like Walker are making it clear which side of the class divide they
stand on. A growing number of Americans, it seems, have begun to understand
that this is precisely the problem and are discovering the source of their
own power.
Gary Younge is a Guardian columnist and feature writer
© Guardian News and Media Limited 2011
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