Here’s one reason we’re stuck in slow growth mode: the budget crunch among state and local governments.The figure shows the yearly percentage point contribution to or subtraction from real GDP growth from the state and local sectors since the late 1980s. The trend bounces around but the recent cliff dive is evident. It’s also why we keep losing jobs in these sectors month after month.
Paul Krugman weighs in:
But it’s even worse than he says. Why? Because if you look at what’s being cut, it’s heavily focused on investment:That is, we’re sacrificing the future as well as the present. Oh, and the cuts that aren’t falling on investment in physical capital are largely falling on human capital, that is, education.It’s hard to overstate just how wrong all this is. We have a situation in which resources are sitting idle looking for uses — massive unemployment of workers, especially construction workers, capital so bereft of good investment opportunities that it’s available to the federal government at negative real interest rates. Never mind multipliers and all that (although they exist too); this is a time when government investment should be pushed very hard. Instead, it’s being slashed.
What an utter disaster.
As JBC in the Krugman comment thread says: "Some men just want to watch the world burn."
Indeed. And as any arson investigator will tell you, the most avid watchers are the guys who started the fire.
Blast from the Past. At Daily Kos on this date in 2008:
If John McCain doesn't win Florida, he almost certainly won't be the Republican nominee. And if he does win Florida, his only chance of avoiding a crushing defeat in November will be to embrace the same moneyed interests he's declared are among the biggest problems facing America.Some months back McCain's campaign applied for federal matching campaign funds. (The money comes from individual taxpayers who voluntarily check off a $3 contribution on their income tax return.) In December seven campaigns were officially notified that they qualified for matching funds. However, because of a funding shortfall, none of the federal matching funds have been released. Apparently the fund reserves the money needed for the general election before it starts to pay out matching funds for the primary, and until monies arrive from this year's tax returns, the fund doesn't have enough money to deliver money for the primary. John Edwards secured a bank loan against the federal funds, so he is officially locked in to abiding by the spending limits in the event he gets the nomination.
McCain qualified for $5.8 million in matching funds. He could do as Edwards has done, and get the money now by securing a bank loan against the eventual payment from the US Treasury. But McCain has been anything but "straight talking" regarding his money; until he receives the money from the Treasury or borrows against it, he's not locked in to the system. Thus, he's currently trying to evade the federal spending limits if he can raise enough money to stay viable, but holding out the option of taking the federal funds if he can't survive through tonight.
Comment Preferences