Breathe. The debt ceiling spectacle is finally over.
Maybe now we can get back to making sense of news about the real economy and the struggles people are experiencing every day.
In that spirit, here are four stories about our economy you might have missed during “debt-ceiling-as-dramatic-miniseries” week:
The State Budget Crisis
As the Center on Budget and Policy Priorities (CBPP) reports, state and local governments already have eliminated 577,000 jobs since August 2008. It’s looking worse for Fiscal Year 2012—which started on July 1, 2011—as new state budgets reveal that education, health care and other vital services will be hit harder than in any year since the recession began.
Of forty-seven states with newly enacted budgets, “38 or more are making deep, identifiable cuts in K-12 education, higher education, health care, or other key areas.”
Stunningly, most states with rainy day funds are choosing not to use them. Texas has a whopping $6 billion in reserves but didn’t use it to offset an $18 billion shortfall for the coming two-year spending period. Instead, they sliced and diced preschool and K-12 education, universities and healthcare. Louisiana’s reserves equaled 8.3 percent of last year’s spending but they didn’t touch them. Yet for the third year in a row, the state will fail to fund K-12 education at the minimum level required to ensure adequate funding for at-risk and special needs students.
If this isn’t a rainy day, then what is?
Meanwhile, twelve states without such reserves are slashing services and enacting large tax cuts for corporations and the wealthy. Sound familiar? The loss of revenues exacerbates the fiscal problems, and makes recovery more difficult as spending cuts lead to further layoffs—in both the public and private sector—while reducing consumer demand. To add insult to injury, ten states pushed through unprecedented cuts and new restrictions in their unemployment insurance programs at the worst possible moment for those still out of work, according to the National Employment Law Project.
Want a glimpse of where GOP-led fiscal austerity would lead this country? Take a look over the pond at the UK, where the Tory-dominated coalition led by Prime Minister David Cameron looks and sounds like a sprightlier offshoot of House Speaker John Boehner’s troops.
Cameron has set out on a forced march for fiscal retrenchment, imposing deep spending cuts (and tax increases) to bring deficits down in Britain. This plan is sold with a jaunty recital of conservative gospel: action on deficit reduction will boost the confidence of business and consumers and in doing so generate more than enough private-sector jobs to make up for those lost in the public sector.