Intex wrote on 2010-08-09 23:24
http://www.nytimes.com/2010/08/09/opinion/09krugman.html?_r=1
America Goes Dark
By PAUL KRUGMAN
Published: August 8, 2010
The lights are going out all over America — literally. Colorado Springs has made headlines with its desperate attempt to save money by turning off a third of its streetlights, but similar things are either happening or being contemplated across the nation, from Philadelphia to Fresno.
Meanwhile, a country that once amazed the world with its visionary investments in transportation, from the Erie Canal to the Interstate Highway System, is now in the process of unpaving itself: in a number of states, local governments are breaking up roads they can no longer afford to maintain, and returning them to gravel.
And a nation that once prized education — that was among the first to provide basic schooling to all its children — is now cutting back. Teachers are being laid off; programs are being canceled; in Hawaii, the school year itself is being drastically shortened. And all signs point to even more cuts ahead.
We’re told that we have no choice, that basic government functions — essential services that have been provided for generations — are no longer affordable. And it’s true that state and local governments, hit hard by the recession, are cash-strapped. But they wouldn’t be quite as cash-strapped if their politicians were willing to consider at least some tax increases.
And the federal government, which can sell inflation-protected long-term bonds at an interest rate of only 1.04 percent, isn’t cash-strapped at all. It could and should be offering aid to local governments, to protect the future of our infrastructure and our children.
But Washington is providing only a trickle of help, and even that grudgingly. We must place priority on reducing the deficit, say Republicans and “centrist†Democrats. And then, virtually in the next breath, they declare that we must preserve tax cuts for the very affluent, at a budget cost of $700 billion over the next decade.
In effect, a large part of our political class is showing its priorities: given the choice between asking the richest 2 percent or so of Americans to go back to paying the tax rates they paid during the Clinton-era boom, or allowing the nation’s foundations to crumble — literally in the case of roads, figuratively in the case of education — they’re choosing the latter.
It’s a disastrous choice in both the short run and the long run.
In the short run, those state and local cutbacks are a major drag on the economy, perpetuating devastatingly high unemployment.
It’s crucial to keep state and local government in mind when you hear people ranting about runaway government spending under President Obama. Yes, the federal government is spending more, although not as much as you might think. But state and local governments are cutting back. And if you add them together, it turns out that the only big spending increases have been in safety-net programs like unemployment insurance, which have soared in cost thanks to the severity of the slump.
That is, for all the talk of a failed stimulus, if you look at government spending as a whole you see hardly any stimulus at all. And with federal spending now trailing off, while big state and local cutbacks continue, we’re going into reverse.
But isn’t keeping taxes for the affluent low also a form of stimulus? Not so you’d notice. When we save a schoolteacher’s job, that unambiguously aids employment; when we give millionaires more money instead, there’s a good chance that most of that money will just sit idle.
And what about the economy’s future? Everything we know about economic growth says that a well-educated population and high-quality infrastructure are crucial. Emerging nations are making huge efforts to upgrade their roads, their ports and their schools. Yet in America we’re going backward.
How did we get to this point? It’s the logical consequence of three decades of antigovernment rhetoric, rhetoric that has convinced many voters that a dollar collected in taxes is always a dollar wasted, that the public sector can’t do anything right.
The antigovernment campaign has always been phrased in terms of opposition to waste and fraud — to checks sent to welfare queens driving Cadillacs, to vast armies of bureaucrats uselessly pushing paper around. But those were myths, of course; there was never remotely as much waste and fraud as the right claimed. And now that the campaign has reached fruition, we’re seeing what was actually in the firing line: services that everyone except the very rich need, services that government must provide or nobody will, like lighted streets, drivable roads and decent schooling for the public as a whole.
So the end result of the long campaign against government is that we’ve taken a disastrously wrong turn. America is now on the unlit, unpaved road to nowhere.
Summary:
All across America state governments cannot afford to fund public services, education, and many essentials.
The federal government is capable of providing aid to these states but they are hardly providing any.
Krugman says this is because the anti-government people (GOP, Libertarians) have programmed Americans to believe money put in taxes is wasted money.
Krugman says trickle down does not work; rich people should be taxed for what they earned in Clinton admin. and the money should be directly put into states.
How do you feel about the collapse of state governments?
What do you think of the anti-government ideas and their push to lower taxes?
What should we do?
Frankly I'm pissed at the GOP and their tax cut plans.
They have one resolute plan in any economic situation.
Economy Good? Lower Taxes.
Economy Bad? Lower Taxes.
The people who vote for these idiots just hear "TAX CUTS = GOOD" and dig their own graves.
Then they complain that Obama is at fault for anything that goes wrong.
The rich need to be taxed more,
TRICKLE DOWN DOESN'T WORK.
In a recession upper class people are not going to spend money hiring maids or buying twenty cars.
The word "recession" has the exact same affect on everyone in the social ladder.
The only problem is the tax money is probably going to be redirected into the hands of the people who caused this mess.
>:|
Blassreiter wrote on 2010-08-09 23:37
So pump prime works?
Chillax wrote on 2010-08-09 23:54
Quote from Blassreiter;119390:
So pump prime works?
It's more of a false boost until the recession rides itself out. Although people like to think FDR's New Deal helped, it really didn't.
spazzyorbit wrote on 2010-08-10 00:56
Obviously we should keep electing the same people.
Axx wrote on 2010-08-10 01:01
Yes, how dare those damn Republicans cripple our nation. It's obvious that the Republicans caused this global depression and are intentionally sabotaging efforts at getting us out. Everyone knows that if the Democrats were in charge, none of this would have happened because the Democrats never waste money and just naturally have better financial strategies than those stupid Republicans. It's not like there are thousands of different political views and financial strategies that fall under the general blanket term 'conservative', anyways.
spazzyorbit wrote on 2010-08-10 01:17
Quote from Axx;119483:
Yes, how dare those damn Republicans cripple our nation. It's obvious that the Republicans caused this global depression and are intentionally sabotaging efforts at getting us out. Everyone knows that if the Democrats were in charge, none of this would have happened because the Democrats never waste money and just naturally have better financial strategies than those stupid Republicans. It's not like there are thousands of different political views and financial strategies that fall under the general blanket term 'conservative', anyways.
Both Dems and the GOP (GOP more in my opinion) have been unforgiving to members going up for election that differ in views from the base party. They don't give any leeway for different ideas and all they have left with is "i'll cut taxes" and attacking the other guy. I think it is worth noticing that the Democratic party has more people (still very few) actually looking for a solution instead of just pandering for votes... although they sure screwed up the 9/11 relief fund GG..
Spartaaaaa wrote on 2010-08-10 21:09
Maybe if the government stops spending all those billions on the useless "War on Terrorism", they might have a little bit more money.
Chillax wrote on 2010-08-11 00:41
Quote from Spartaaaaa;120213:
Maybe if the government stops spending all those billions on the useless "War on Terrorism", they might have a little bit more money.
You do know that the need for more military equipment in turn creates more jobs? In any case, I'm pretty sure the problem is more deeply-rooted than this. The situation will obviously differ for each city.
abc33kr wrote on 2010-08-11 01:38
Quote from Axx;119483:
Yes, how dare those damn Republicans cripple our nation. It's obvious that the Republicans caused this global depression and are intentionally sabotaging efforts at getting us out. Everyone knows that if the Democrats were in charge, none of this would have happened because the Democrats never waste money and just naturally have better financial strategies than those stupid Republicans. It's not like there are thousands of different political views and financial strategies that fall under the general blanket term 'conservative', anyways.
hmm i thought this was sarcasm.
Aikuna wrote on 2010-08-11 19:18
Reading this article does not have me surprised at all. It makes me upset but really I'm not sure on any ways to "fix" things.
I'm starting to more seriously consider my idea of just becoming a hermit on a mountaintop somewhere. x.x
wolfram wrote on 2010-08-17 21:28
The lights are going out all over America — literally. Colorado Springs has made headlines with its desperate attempt to save money by turning off a third of its streetlights, but similar things are either happening or being contemplated across the nation, from Philadelphia to Fresno.
Meanwhile, a country that once amazed the world with its visionary investments in transportation, from the Erie Canal to the Interstate Highway System, is now in the process of unpaving itself: in a number of states, local governments are breaking up roads they can no longer afford to maintain, and returning them to gravel.
And a nation that once prized education — that was among the first to provide basic schooling to all its children — is now cutting back. Teachers are being laid off; programs are being canceled; in Hawaii, the school year itself is being drastically shortened. And all signs point to even more cuts ahead.
Federal Law states that children must still attend school for a full 187 days out of the school year. There is no shorting of the school year. What occurs as a cost saving measure is Hawaii moved to a 4 day school week, they just added an extra 2 hours to the regular school day. In effect, there may be less days they have to attend, but the extra 2 hours added still equals 187 days.
We’re told that we have no choice, that basic government functions — essential services that have been provided for generations — are no longer affordable. And it’s true that state and local governments, hit hard by the recession, are cash-strapped. But they wouldn’t be quite as cash-strapped if their politicians were willing to consider at least some tax increases.
Told by who? Governments by whole and large, will not show a profit. As they are using tax payer dollars, if they turn a profit, it shows that they are getting too much money and will certainly face a cut in their budget the next fiscal year.
And the federal government, which can sell inflation-protected long-term bonds at an interest rate of only 1.04 percent, isn’t cash-strapped at all. It could and should be offering aid to local governments, to protect the future of our infrastructure and our children.
Krugman is assuming that our debt is always being bought up. Its true that the US government can always print more money to pay off debt, but then why tax us if they can print all the money they want. If the government isn't cashed strapped, why do they need to tax us to provide services? That's right, they tax us to pay back the debt they borrow. Its called deficit spending, someone's gotta pay the debt back. The more money they print, the less your money is worth. This fiscal year alone, we're on the hook for 1.5 trillion dollars of debt.
But Washington is providing only a trickle of help, and even that grudgingly. We must place priority on reducing the deficit, say Republicans and “centrist†Democrats. And then, virtually in the next breath, they declare that we must preserve tax cuts for the very affluent, at a budget cost of $700 billion over the next decade.
Only a trickle? 789 Billion this year alone; All packaged as the American Reinvestment and Recovery Act. 230 million to teacher just this past week. There is also now talk of another "stimulus" during the "lame duck" session of Congress. Just a note, Over site of the ARRA funds has already noted about 30 billion dollars in fraud.
Tax cuts for the very rich, we all know he means, Bush Tax Cuts. They did a lot more then just give tax cuts for the very rich, they actually forced the rich to pay a bigger portion of the taxable income. During the Clinton years, the rich paid in about 32% of taxable income as a whole, after the Bush tax was implemented, that jumped all the way up to 66%. In short, the Bush Tax cuts forced the Rich to pay 2/3 of the taxable income. Bush Tax cuts gave everyone a cut, not just the rich.
In effect, a large part of our political class is showing its priorities: given the choice between asking the richest 2 percent or so of Americans to go back to paying the tax rates they paid during the Clinton-era boom, or allowing the nation’s foundations to crumble — literally in the case of roads, figuratively in the case of education — they’re choosing the latter.
Read the above about tax cuts. Since he mentions roads here, I shall address that too. These governments didn't have to go out and destroy the roads they couldn't take care of anymore. Privatized them as one Midwest State has, namely Indiana. They could not take care of a stretch of roads, they privatized them, turn them over into a company looking to make a profit. (not a loss). Usually this form of an agreement leads to the state/local government getting a cut of the profits to feed their coffers. Today Indiana shows a surplus in their state budgets because of sound business proposition as mentioned above.
It’s a disastrous choice in both the short run and the long run.
Just an opinion
In the short run, those state and local cutbacks are a major drag on the economy, perpetuating devastatingly high unemployment.
It’s crucial to keep state and local government in mind when you hear people ranting about runaway government spending under President Obama. Yes, the federal government is spending more, although not as much as you might think. But state and local governments are cutting back. And if you add them together, it turns out that the only big spending increases have been in safety-net programs like unemployment insurance, which have soared in cost thanks to the severity of the slump.
ARRA - American Reinvestment and Recovery Act, is not a safety net program. Neither was TARP, which was used to fund GM and Chrysler, something it was never intended to do. Also now we are hearing of foreign banks that got their hands on TARP funds. Many Americans also agree that ARRA has done nothing to alleviate the current economic downturn and that it would be better if nothing was done. About the only thing these politicians can agree on is to extend unemployment benefits which is a drop in the bucket. ARRA funds may be shown as spent, but they aren't projects that aren't rolled out until 2010 or later.
That is, for all the talk of a failed stimulus, if you look at government spending as a whole you see hardly any stimulus at all. And with federal spending now trailing off, while big state and local cutbacks continue, we’re going into reverse.
ARRA is a stimulus. The stimulus just didn't' work.
But isn’t keeping taxes for the affluent low also a form of stimulus? Not so you’d notice. When we save a schoolteacher’s job, that unambiguously aids employment; when we give millionaires more money instead, there’s a good chance that most of that money will just sit idle.
Who he to say how a millionaire spends money? There are many many millionaires out there. As in net worth millionaires, not total income millionaires. But to those who do make 1 million+ a year, they just don't hit 1 million and go woo hoo, and go on vacation, you want more money. That's why they invest on long term value investments. Namely small business and hiring people to run them.
And what about the economy’s future? Everything we know about economic growth says that a well-educated population and high-quality infrastructure are crucial. Emerging nations are making huge efforts to upgrade their roads, their ports and their schools. Yet in America we’re going backward.
America is transitioning into a service economy and away from a manufacturing economy, while many emerging nation are gearing up their manufacturing economies due to cheap labor and a more educated work force. Hence American companies move overseas, same education, same training, but cheaper. In terms, this lowers the prices we pay for the stuff we want.
How did we get to this point? It’s the logical consequence of three decades of antigovernment rhetoric, rhetoric that has convinced many voters that a dollar collected in taxes is always a dollar wasted, that the public sector can’t do anything right.
We just want our dollars so we can decide how we want to spend them. Our choice, not yours.
The antigovernment campaign has always been phrased in terms of opposition to waste and fraud — to checks sent to welfare queens driving Cadillacs, to vast armies of bureaucrats uselessly pushing paper around. But those were myths, of course; there was never remotely as much waste and fraud as the right claimed. And now that the campaign has reached fruition, we’re seeing what was actually in the firing line: services that everyone except the very rich need, services that government must provide or nobody will, like lighted streets, drivable roads and decent schooling for the public as a whole.
There are charter schools, which is totally beating public schools and is where a lot of the students are now deciding to attend. Also noted, the government does not need to provided these services. A for profit company can do the same.
So the end result of the long campaign against government is that we’ve taken a disastrously wrong turn. America is now on the unlit, unpaved road to nowhere.
Opinion. Not a fact.
Axx wrote on 2010-08-18 17:49
Tax cuts for the very rich, we all know he means, Bush Tax Cuts. They did a lot more then just give tax cuts for the very rich, they actually forced the rich to pay a bigger portion of the taxable income. During the Clinton years, the rich paid in about 32% of taxable income as a whole, after the Bush tax was implemented, that jumped all the way up to 66%. In short, the Bush Tax cuts forced the Rich to pay 2/3 of the taxable income. Bush Tax cuts gave everyone a cut, not just the rich.
I actually tend to agree with most of your rebuttals, but then again I don't care enough to do much beyond just nod my head. Maybe someone who does will make proper responses to your argument. But I kinda disagree with the quoted point, based on this article
Tax cuts for the rich shift the tax burden upward that also makes me nod my head.
Summed in brevity:
In short, the rich paid more taxes because they made more; the poor paid less taxes because they made less. No poor person in his right mind would accept this as a favorable development, and only a supply-sider would spin it that way.
Of course in the context of government, it's probably a favorable outcome because it's the rich who pay the politicians anyways (public servants? hahahahahaha!)
wolfram wrote on 2010-08-18 19:59
Quote from Axx;129920:
I actually tend to agree with most of your rebuttals, but then again I don't care enough to do much beyond just nod my head. Maybe someone who does will make proper responses to your argument. But I kinda disagree with the quoted point, based on this article Tax cuts for the rich shift the tax burden upward that also makes me nod my head.
Your link is exactly what i'm talking about. The Bush Tax Cuts shift the tax burden upwards because the Rich make more. :D.
wolfram wrote on 2010-08-18 20:07
Quote from Axx;129920:
I actually tend to agree with most of your rebuttals, but then again I don't care enough to do much beyond just nod my head. Maybe someone who does will make proper responses to your argument. But I kinda disagree with the quoted point, based on this article Tax cuts for the rich shift the tax burden upward that also makes me nod my head.
Summed in brevity:
Of course in the context of government, it's probably a favorable outcome because it's the rich who pay the politicians anyways (public servants? hahahahahaha!)
It is true, the rich pay more because they make more. I'm just saying with tax cuts, the rich pay more overall. Without the tax cuts, the rich still pay, but the poor pay more also.