Treading water

Treading water

by digby

If anyone's interested in the details of last Friday's budget deal, Think Progress has a rundown. This is the upshot:

These proposed cuts, alongside rising gas prices and draconian budget cuts at the state and local level, have already led some economists to knock up to a point off of their estimate for U.S. economic growth.

For instance, Diane Swonk, chief economist at Mesirow Financial, “said she had cut her forecast for 2011 to 3.3 percent, from 4.2 percent.” Anything below 3 percent and “you’re just running on a treadmill. You’re not getting anywhere,” she said. Here are just some of the cuts included in the deal, which should be voted on by the end of the week:

– Special Supplemental Nutrition Program for Women, Infants and Children (WIC): $504 million

– State and local law enforcement: $415 million

– Community oriented policing services (COPS): $296 million

– Green jobs innovation fund: $40 million

– Community health centers: $600 million

– Dislocated worker assistance: $125 million

– Substance Abuse and Mental Health Services Administration (SAMSHA): $45 million

– Occupational Safety and Health Administration (OSHA): $49 million

– IDEA (special education): $16 million

– Infectious disease prevention: $277 million

– National Institutes of Health: $260 million


They did secure funding for the SEC and the FTC and Obama's Race to the Top initiative, so it's not all bad.

Update: Kevin Drum cites a different analysis which says that the tea partiers were taken to the cleaners by Obama who really only agreed to an additional 11 billion dollars in real cuts for FY 2011. If true, that's certainly better than 38 billion. But considering that most liberal economists believe that anything but more stimulus at 8.8% unemployment is a wrong turn, it really only means that the people got screwed a little bit more gently than originally thought. (And as others have pointed out, the new budget baselines -- chimera or not --- establish the new starting point for increases going forward and will add up to much bigger cuts over time.)

The essential problem with this is that once you buy into cuts of any kind, the proper argument --- and policy --- is lost. Recall that Obama started off with a 40 billion dollar stimulus, which most sane economists thought was rather tepid. There was a reason for that. Conditions have not improved so drastically since he first proposed that that anyone can believe it's time to contract government spending -- particularly when the states are now bleeding red ink like crazy.

Still, let's hope that two thirds of these cuts really are accounting gimmicks and that the Republicans are willing to let that be their big win. Actual human lives underlie all these numbers so the fewer real cuts the better.


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