Doom. And, While We’re At It, Doom.

by wjw on August 11, 2010

Friend of the blog Foxessa pointed me at an article about our floundering recovery from Paul Krugman.

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 . . .

(For more on the extremes to which local governments are going to in order to cut basic services, check here.)

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 . . .

Time to pay for the colossal deficits created in the last 10 years.  Why do I think it’s going to be people like me who foot the bill, rather than those who actually have the money?

Ralf the Dog August 11, 2010 at 5:29 am

As a person who pays far more taxes than most, I do not pay enough taxes. I would trade 40% Federal taxes for better roads. I would trade 40% Federal taxes for lower unemployment. I would trade 40% Federal taxes if it would put more money in the hands of the lower economic brackets so they could spend more money with my companies.

When I get more money, I just put it in the stock market. This makes me even more money but it does nothing for the economy. Put the money in the hands of those that will spend it.

Dave Bishop August 11, 2010 at 8:21 am

Someone recently summed up the policies of the British Conservative Party (the ‘Tories’) – who are now in power here in the UK (propped up by the Liberal Democrats):

“To those who hath shall be given – the rest of you can make your own arrangements”.

Massive cuts in public expenditure have been announced here as well.

Shash August 13, 2010 at 2:12 am

I’m happy to pay taxes as long as I can drive on roads I don’t have to maintain myself.

DensityDuck August 17, 2010 at 7:39 pm

But at least we can keep all those retired teachers and policmen and firefighters and bus drivers in the style to which they’ve become accustomed. And hey, if they want to do a little consulting on the side, or maybe pick up another full-time job to supplement their 97%-salary pension and Social Security check, then who are we to stop them?

wjw August 18, 2010 at 6:30 am

Speaking as someone who’s married to a recently retired civil servant, I should point out that the pension is more in the neighborhood of two-fifths of the actual salary. And, of course, the health insurance is something you pay for yourself.

I like pensions. I think everyone should have one. It makes them less dependent on taxpayer-funded social security, for one thing.

If your employer doesn’t offer you a pension, don’t be mad at civil servants for being smarter than you.

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