Failed Economic Theory Basis For Budget Cuts
The blame for the unnecessary federal budget cuts that start to go into effect today in Oklahoma and elsewhere in the country is not an issue of political partisanship so much as the embrace of an ill-advised economic theory.
That theory, which has prevailed and failed in much of Europe during the Great Recession, is that austerity measures—primarily cuts in government programs because of deficits—will boost economies by creating more business investment because of, as New York Times columnist Paul Krugman sarcastically puts it, the myth of the “confidence fairy.”
But austerity, demanded in Europe by somewhat methodical German political and economic leaders, has been an abject failure in countries such as Ireland and Greece. What those countries have needed, in fact, is stimulus money to get people back to work. Creating misery for a generation of people only deepens the crisis and, in the end, is an immoral and unethical response to human suffering. The triumph of neoliberalism doesn’t mean it’s right, only that it has become normalized.
Here in the U.S., it’s not just the Republicans who have been obsessed with the deficit. President Barack Obama has repeatedly mentioned the deficit as a major problem when it just isn’t the case. Consequently, our national political leaders agreed in 2011 to major, across-the-board budget cuts to go into effect later. The idea was that the threat of the looming cuts would spur action on fiscal compromise and, of course, more careful and surgical budget cuts.
But that compromise hasn't happened, and now the cuts are here. Again, the entire idea of the cuts is based on the fallacious argument that the federal budget deficit is holding back the economy in some manner or that deficits or loans are themselves intrinsically bad. Not one iota of real evidence has been presented to support this view, yet it has become, even among many Democrats, prevailing wisdom. Interest rates remain low. Foreign investment remains strong. What the U.S. economy actually needs is even more government stimulus to reduce unemployment. When people ready and able to work can’t find a job, government needs to create employment, not fire people and create more suffering.
Obama wants tax hikes to help tackle the deficit, which makes sense in terms of the country’s tax code and growing income inequality, but entrenched Republicans are adamantly against it, so we argue about this classic dichotomy—tax or cut—when the real issue is both sides are embracing a false idea. Unemployment is hurting the economy, not the deficit.
In Oklahoma this year, the budget cuts will mean the loss of $4.9 million in federal funding for schools and the loss of 70 teacher and teacher aide jobs. Another 90 teachers and support personnel who serve disabled students will lose their jobs. Approximately 800 children will lose access to Head Start, an educational program that serves low-income families.
Army bases in Oklahoma will lose $48 million in funding; Air Force bases will lose $20 million. It’s estimated that 24,000 Department of Defense employees here will be furloughed. That’s a lot of people, and the furloughs are almost sure to hurt the state’s economy.
That’s just a partial list. The impact on the national level, such as the furloughs of air traffic controllers, could create major travel delays.
It would be one thing if these cuts were driven by real expediency, but the fact we’re cutting education and laying off people for a failed economic theory and a conservative ideology embraced by Republicans and even many Democrats make them simply intolerable.
Firing people for no good reason should be called out for what it is: An immoral act that will increase needless suffering.