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.
Yet the 2011 second-quarter economic numbers announced last week revealed that the UK economy grew by an anemic 0.2 percent, which follows an anemic 0.5 percent the previous quarter, and a decline in the last quarter of 2010.
We have more than thirty years of proof that conservative economics—what Paul Krugman describes as the notion that the “confidence fairy” and private sector growth will overcome all obstacles—is bunk.
Yet in Washington, Boehner’s caucus exhibits the same “cut and grow” fantastical zealotry.
It’s no mystery—cutting spending and taxes, laying off people and putting less money in the hands of consumers is no prescription for recovery, but it’s a great way to increase inequality and the misery index.
The State of America’s Children
A story that should have been plastered on the front pages of every major newspaper instead of Representative Eric Cantor’s mug was the release of the Children’s Defense Fund report on The State of America’s Children 2011. It’s disturbing to say the least.
Children are the poorest age group in the United States: one in five children—including one in three black and Hispanic kids, and one in ten white kids—lives in poverty. Every thirty-two seconds another child is born poor. Nearly half—6.9 million—of all poor children live in extreme poverty (below half the poverty level, or less than $11,025 annually for a family of four). Homelessness among preschoolers increased 43 percent in the past two school years. Millions of children are without health coverage.
Meanwhile, the federal programs that we know help level the playing field for kids who face staggering obstacles—like Medicaid and CHIP, WIC, food stamps, Head Start, Pell Grants, Social Services Block Grant—are on the chopping block every time there is a budget debate (not to mention the aforementioned state programs like early childhood development, K-12 and higher education, and mental health services). The result, according to the report, is to “unravel the safety net for poor and low income children.”
How does this nation justify that when it comes to a black child’s well being, seventy nations have lower infant mortality rates than this country? A hundred and forty-four nations have a lower incidence of low birth weight—including Nigeria and Kazakhstan—while we cut the Women, Infants and Children and nutrition assistance programs? That black women are more likely to die due to pregnancy complications than women in 54 other nations, including Iran and Saudi Arabia?
As Children’s Defense Fund President Marian Wright Edelman writes plainly, “How can we justify massive tax giveaways to the richest two percent and continue tax loopholes for wealthy corporations at a time when 15.5 million children are languishing in poverty?”
Jobs and the American Dream
The ink wasn’t yet dry on the signed debt deal when President Obama quickly pivoted to jobs and the real economy.
“In the coming months, I’ll continue to fight for what the American people care most about: new jobs, higher wages and faster economic growth,” he said at the Rose Garden.
He mentioned the idea of an infrastructure bank to promote public-private partnerships that would “repair our roads and our bridges and our airports, rebuilding our infrastructure” and putting construction workers back to work.
That’s indeed a very good idea, and one that has long languished in Congress. It’s also one of fifteen recommendations in a report that received scant attention from the media: A Vision for Economic Renewal: An American Jobs Agenda, written by the New America Foundation’s Task Force on Job Creation, co-chaired by Leo Hindery, chair of the Smart Globalization Initiative, and Leo Gerard, president of the United Steelworkers.
Other commonsense actions called for in the report include: eliminate tax incentives that encourage American companies to invest overseas rather than here; spur domestic manufacturing with a 10 percent investment tax credit for renovating manufacturing facilities; extend the existing cash grant program for renewable energy production; establish firmer buy-domestic procurement requirements (“no single measure would do more to help resuscitate US employment”).
But nothing—and I mean nothing—will happen without pressure from outside the Beltway. Which brings us to another story you might not hear about in much of the media that hypes spectacle and tea party antics but shortchanges progressive mobilization. The Take Back the American Dream conference will come to DC on October 3, focused on a positive agenda for good jobs, growing wages and a strong middle class—an agenda that’s been proven to work as opposed to conservative fantasyland economics.
The only way we break the hammerlock that corporate lobbies and the Tea Party have clamped on Congress is through a movement, and that’s exactly what leaders like Van Jones and Robert Reich, and groups like MoveOn and the Campaign for America’s Future, are bringing to DC.