Whats left of liberal: Poverty and Austerity

What Our Leaders Should Be Addressing: A Response to Paul Ryan's Budget and Austerity Measures

Poverty is on the rise

Recently the amount of Americans living in povertyreached the highest levels in 20 years. Nearly 16% of us now live below thepoverty line. This means that 45 million Americans now live on an income of$23,000 or less for a family of four. A large chunk of us now live at 2^ndor even 3^rd world country standards. The GDPs per capita in Saudi Arabia, Trinidad and Tobago, Kazakstan, and Iran are between $25000 and $15000.(1) These are not traditionally countries we compare America to; these are countries welook at as developing or backwards, yet 45 million of us live at or below theirstandards. But this is the new America:a highly stratified society where the majority of us barely survive month tomonth, and a very small elite control 90% of our wealth.

The future is looking grim for a lot of Americans; thesenumbers are only getting worse, due in large part to the lack of effectivepolicies and political support to change them. This includes conservatives aswell as liberals. Poverty isn’t even a social issue worth talking about formost policy makers. They’re not worried about the 16 million children in theirown country that are starving or the vast ghettos full of dilapidatedbuildings, and failing basic infrastructure. (2) Instead, they’re opining aboutthe national debt, and blocking healthcare legislation that could actually helpthe poor. And most prominently they babble endlessly about unemployment.

Wages continue to stagnate

Whyworry about high unemployment, when even employed, most workers are paid hourlyand will make either minimum wage or slightly above it, which when averaged outover a 40 hour week is at or below the poverty line. There were nearly 6million workers making at or below the minimum wage in 2011, forcing them tohold down multiple jobs just to survive. Sadly, many of these same workersfinished high school, and some even college, but due to stagnant wages they areforced to work longer hours at reduced rates just to make ends meet. (3)This iswhat our leaders should be focusing on, not the incessant arguing about debtceilings, and tax cuts.

As Americaslips further and further into the conservative grip, the real issues get moreand more sidelined. The conservatives distract us with meaningless dialogueabout the debt or hot-button social issues that affect a very small minority; theydon’t want to talk about the real problems in this country, since they don’thave any real answers. In the midst of the worstrecession in years, our congress has passed nearly nothing that addressed thereal problems facing Americans, and in fact had literally passed nothing atall. This congress has passed only 61 bills this year out of the nearly 4000put to the vote. (4) This abysmal performance highlights the ineptitude andgridlock that our current political system is capable of.

Why the deficit doesn't matter right now

Insteadof discussing poverty and the foreclosure crisis they have been obsessed withscaring people about the national deficit. Running a country with a high debtto GDP ratio doesn’t matter to the guy living in a box on the side of the roadwho lost his home to foreclosure. And it doesn’t matter to you either. Anyonewho’s ever taken a basic economics class in college could tell you that: a country having debts is not the same as aperson having debt. There is no comparison, because ultimately, the US can print itsown money and sell bonds to pay off its debt. Of course, this action is notsustainable forever and carrying a high debt to GDP ratio indefinitely is notgood economics for our country, as it could lead to higher interest rates andfalling purchasing power. Yet, the only way to get our debt back to manageablelevels is to get the GDP to go up by stimulating the economy, and that entailsmore spending by the government. Rather than cutting local government jobs andrefusing federal money, policy makers should be borrowing money and creatingmore jobs at the state and local levels. This may sound counterintuitive, butthe only way to end a recession is to spend you way out as demonstrated by Roosevelt in the 1930’s. Austerity measures as proposedby the conservatives will not and do not work because they are a net drain onthe economy. Great Britainand most of Europe are finally realizing thisnow after several years of severe austerity, with little or no GDP growth.

Weshould of course have a long-term vision of our country that doesn’t saddlefuture generations with debt, but in order to get the economy running again, itmakes good economic sense to continue spending. “There is no intrinsiccontradiction between providing additional fiscal stimulus today, while theunemployment rate is high and many factories and offices are underused, andimposing fiscal restraint several years from now, when output and employmentwill probably be close to their potential.” From Douglas Elmendorf, director ofCongressional Budget Office. (5) Aslong as the market-makers continue to buy and sell our bonds, then our countrywill remain financially solvent no matter what the GDP/Debt ration is. The proofis in the pudding, countries are still buying our bonds at phenomenally lowrates. This means that the rest of the world thinks America is going to be around alongtime. If they thought our deficit was going to crush us, our interests rates onbonds would look like Greeceand be at 20%. Many countries run very high debt ratio’s for years; consider Japan with adebt to GDP ratio of 197%. It makes our current public debt ratio of 62% seemmuch more manageable. (6)

Ryan's Plan will leave millions unempolyed

So let’s stop talking about meaningless issues that inreality have no bearing on our economic health whatsoever. We need to focus onthe fact that a growing number of Americans face a bleak future of minimum wagejobs and abject poverty. We are facing the worst recession in years in thiscountry and the conservative’s solution is to make more cuts, and to pass abudget that would put us back to 1950’s levels of spending. The Ryan budgetwould strip almost all spending at the federal level except for the military. Itwould reduce the amount spent on all other government programs besidesentitlements to 4.75% of GDP, and this includes the military, which takes at minimum4%, leaving 0.75% for everything else. (7)That’s less than $100 billion for allother government agencies including, among other things the Department ofEducation, Agriculture, the FBI, and the DOT. It would also mean the loss offunds, not only for social programs that conservatives despise, but federal moneythat goes to local agencies and States to pay for things like law enforcement,roads, bridges, and ports. Not to mention, slashing the federal governmentwould mean the loss of jobs for literally millions of Americans. What is theplan for all these unemployed federal workers? What is in the plan for all themillions more at the state and local level that would be cut due to huge lossesin their departmental budgets?

From a purely idealistic viewpoint, Ryan’s budget may bethe epitome of everything that conservatives stand for, but from a realisticpoint of view it would be a disaster for millions of Americans and push ourcountry into a depression. This is not the time to be introducing sweepingchanges to our already shaky economy.