Thursday, 1 September 2011

"Demagoguing " the US FEDERAL BUDGET

Many people, from ordinary folk to journalists and economists compare the US Federal budget to a family budget. By so doing, their goal is to try and prove that if a family cannot live perpetually in debt, how can the government? And if that is just common sense, then people ought to support a balanced budget amendment and force the government to live with the revenues it takes in. The scenario that compares federal budget to family budget assumes that government and family spending is comparable when in fact there is absolutely no comparison.

a. Government budgets need not be balanced on an annual basis, because when the economy contracts every few years, government is the only source for stimulus to jump-start the economy. Moreover, federal spending for programs like infrastructural development, research and development is absolutely essential for these are tasks the private sector does not carry out, although it benefits from them. Finally, federal spending unlike family spending is not only for investing in the country's future and in stimulating the economy, it is also designed to sustain the social safety net, thus the social fabric and maintenance of sociopolitical harmony.
b. While it is true that there is vast spending waste in government, many people do not realize that outsourcing government work in every area from defense to environment has resulted in huge costs in the name of 'efficiency' and strengthening the private sector while reducing the public sector. In other words, federal waste is owed in part to the political decision to transfer money from public to private sector by contracting work some of which could be done much cheaper by federal agencies.
c. While it is true that the US cannot just suddenly cut defense by 70% as some of us would suggest, deep defense/intelligence cuts are absolutely necessary because they are part of the vast government waste.

d. While the Cloward/Piven Strategy may appear as another method employed by the radical Left to create and manage crisis, the reality is that the system needs no such help as it generates crisis owing to structural conditions. That is, as corporate capitalism has been gaining strength in the past three decades, the fiscal structure weakens against the background of globalization that entails corporations take out trillions to invest abroad. 

Let us not forget that Cloward and Piven came up with their 'strategy' more than half a century ago, and only recently has it become somewhat trendy largely because Glenn Beck, Newt Gingrich, and the Tea Party elements interested in using it to argue that there is a 'leftist' conspiracy theory, and by 'leftist' they also mean the Democratic party and President Obama. 

Given the very real and serious budget problems that the US is currently facing, it is easy for charlatans and right-wing populists to invoke conspiracy theories and make naive comparisons between family budget and federal budget. "Demagoguing" the US federal budget is cheap and politically opportunistic. The difficulty is suggesting tough cuts that would best serve the majority of the American people.

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