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Think Again: Austerity Kills, and So Will the Sequester

Sequestration

SOURCE: AP/Matt Rourke

Government workers supporting union members and activists protest against the across-the-board federal spending cuts known as sequestration at Independence National Historical Park in Philadelphia.

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On Tuesday, the Center for American Progress released a report called “4 Ways that Austerity Demands Have Reached New Extremes,” which notes that the House Republican caucus is now proposing “spending cuts … so severe that the House Republican caucus has been unable to pass actual spending bills to implement its own budget plan, since those bills would have to make deep and specific cuts that are beyond the pale of what even most conservatives would support.” They are doing so based on the “claim that their demands for more austerity are a response to exploding budget deficits, but in fact, the federal budget deficit is shrinking, not growing.”

As Nobel Laureate economist Paul Krugman argued at length in The New York Review of Books, recent history both in Europe and the United States has proven conclusively that “the results [of austerity] were disastrous—just about as one would have predicted from textbook macroeconomics.” Not only has the experience of the nations that instituted austerity policies made their economic predicaments far worse than before, but the data upon which the arguments were made were also “deeply flawed.” The so-called Reinhart-Rogoff thesis—in which the authors insisted that large levels of government debt would inevitably result in much lower rates of economic growth—was discredited when the authors belatedly made their data widely available in April 2013.

As Krugman notes, Thomas Herndon, a graduate student at the University of Massachusetts, Amherst, found that in addition to a coding error:

… their data set failed to include the experience of several Allied nations—Canada, New Zealand, and Australia—that emerged from World War II with high debt but nonetheless posted solid growth. And they had used an odd weighting scheme in which each “episode” of high debt counted the same, whether it occurred during one year of bad growth or seventeen years of good growth.

The result was “undermining the scare stories being used to sell austerity,” coupled with the understanding that “the immense suffering that has resulted from these policy errors” was all for naught.

The most visible symbol of austerity economics in U.S. politics has been the congressional sequester. Because of Congress’s inability to agree on budget numbers last year, all federal agencies were forced to shave off 5 percent from their budgets. The plan made little sense, not only because of its meat-cleaver approach to budget reduction but also because all sides agreed that the fiscal problems facing the United States derived not from agency spending but from so-called entitlement programs, which were unaffected by the cuts.

Still, right-wingers celebrated the move and continue to do so. In a just-published editorial in The Wall Street Journal entitled “The Power of 218,” the paper’s editorial staff termed the sequester to be “a rare policy victory the GOP has extracted from Mr. Obama, and it is squeezing liberal constituencies that depend on federal cash.” Such ideological assertions received considerable support in the mainstream media from early reports such as the one that appeared in The Washington Post back in June, entitled “They said the sequester would be scary. Mostly, they were wrong,” by David A. Fahrenthold and Lisa Rein. The report—which did not entirely support the headline—compared what the authors believed to be the scare-tactic warnings of the Obama administration regarding the potential results of the sequester to the actual results that materialized in its first few months. They concluded that in many cases, the “cuts … didn’t cause much real-world pain.” The authors quoted Robert L. Bixby, executive director of The Concord Coalition, which they described as an organization that “pushes for fiscal responsibility in Washington”—apparently, to The Washington Post, “fiscal responsibility” and “budget cuts” are the same thing—explaining, “The dog barked. But it didn’t bite.” In other words, all is well—the warnings were much ado about nothing.

This view has been largely reflected in the media’s sequester coverage. Indeed, outside of those federal workers who have been furloughed as a result of the sequester, it has not always been easy for those of us who enjoy comfortable incomes to discern any ill effects of its implementation. As it happens, I was directly impacted by the sequester when, on the day it went into effect, my flight was canceled due to a lack of manpower at the airport. I ended up taking a long bus ride, but if I had waited a day, then Congress would have saved me the inconvenience. Congress prevented the furloughs of air traffic controllers and other air travel personnel, which would have affected the less vulnerable and more powerful—indeed, senators and representatives themselves—and replaced the furloughs with $253 million from the FAA’s Airport Improvement Program. Thus far, no one appears to have been inconvenienced.

Whenever the mainstream media has focused on the negative effects of the sequester, it has been on the programs favored by conservatives. Cuts to the military have led to complaints by neoconservatives, and former FBI Director Robert Mueller said that sequestration—which will cut about $700 million from the FBI’s $8 billion budget and cause furloughs for its 36,000 employees, possibly beginning next month—will move resources from violent crime and white-collar business fraud to ensure that alleged national security threats and cyber-threats get priority.

Still, the impact of the sequester has been slow to materialize in the minds of most Americans. An ABC News/Washington Post poll taken back in May found that 37 percent of those surveyed said they had experienced negative effects from the sequester, up from 25 percent in March.

In fact, almost all Americans have been or are about to be negatively affected by the sequester in significant ways, though this may not be apparent from anecdotal reporting in the mainstream media. Sequestration will likely prevent the creation of up to 1.6 million jobs in the next year, according to the Congressional Budget Office, and a recent report by Goldman Sachs suggests that this process is already well underway: “Personal income, for example, has been largely stagnant across the board due in large part to a 0.5 percent decline in government wages and salaries in July.”

Where is the reporting about the human cost of the sequester? Back in early May, ProPublica credited Mother Jones with examples of how sequestration has played out in each of the 50 states and noted that The Washington Post was charting the sequester’s projected and actual impact on federal agencies. It cited Government Executive for tracking furloughs by department and agency, and offered up its own compilation of what it deemed to be some of the best charts and graphics explaining the sequester’s impact. But the reporting on its direct impact—many months later—is still not so easy to locate.

One exception is a story by Nancy Cook in National Journal, “The Sequester’s Devastating Impact on America’s Poor.” In it, she told the story of Kristina Feldotte of Saginaw, Michigan, who is unemployed and one of roughly 82,000 people in that state who have been forced to get by on federal unemployment checks—checks whose dollar amounts have fallen by 10.7 percent since late March. “That’s as much as a $150 per month from payments that, at most, clock in at $1,440.” Cook also wrote about “the Meals on Wheels program in Contra Costa County, California, which, like the national program, has had to cut 5.1 percent of its budget. After losing $89,000 in federal funding over a six-month period, the program had to scale back the number of meals it serves from 1,500 to 1,300 a day.” As a result, Paul Kraintz, director of the county’s nutrition program, said that people will either “die or be institutionalized if we don’t get to them.”

And cuts to the Head Start program have been particularly devastating. It has been forced into a 5.27 percent reduction to its $8 billion in funding. As Sam Stein noted in The Huffington Post:

All told, 57,265 children (nearly 6,000 of whom attend Early Head Start) saw their services eliminated, according to data provided to The Huffington Post by HHS. The state to take the biggest hit was California, where 5,611 Head Start kids were denied a spot in the program. In Texas, that number was 4,410. In New York it was 3,847. But underscoring just how widespread the effects of sequestration have been felt, even smaller states were impacted. In North Dakota, Head Start eliminated 194 slots in its program. In Rhode Island, it cut 450 positions. Even in far-flung Hawaii, 72 Head Starts slots were slashed.

Stein’s reporting in The Huffington Post has been one of the only sources where one could consistently keep up with the effects of the sequester. His most impressive report, entitled “Sequestration Ushers In A Dark Age For Science In America,” focused on the long-term, self-inflicted damage America was doing to itself by ruining decades of important research projects that will never be able to be repeated, simply by removing funding in a foolish manner. People will undoubtedly die as a result of this over time, and science will be set back for decades. “‘It is like a slowly growing cancer,’ Steven Warren, vice chancellor for research at the University of Kansas said of sequestration at a recent gathering of academic officials in Washington, D.C. ‘It’s going to do a lot of destruction over time.’”

Unfortunately, by the time Americans become aware of that destruction—not only to science but to much of the fabric of life in our nation, and particularly to the lives of our most vulnerable citizens—it will likely be far too late to address its consequences.

Eric Alterman is a Senior Fellow at the Center for American Progress and a CUNY distinguished professor of English and journalism at Brooklyn College. He is also “The Liberal Media” columnist for The Nation. His most recent book is The Cause: The Fight for American Liberalism from Franklin Roosevelt to Barack Obama, recently released in paperback.

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