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NC Budget and Tax Center

It’s been a tough week for proponents of austerity economics—the misguided notion that government spending cuts and debt reduction magically produce economic growth. First, a team of respected mainstream economists completely discredited one of the foundational studies supporting the claim that excessive public debt holds back economic growth. Then, the International Monetary Fund—formerly a bastion of austerity economics—warned the United States that its budget cuts (including sequestration) had gone too far and would likely damage the nation’s economic growth.

Essentially, these developments repudiate the idea that high levels of public debt hurt economic growth along with the fantasy that cutting government spending help economic growth. Altogether, it’s been a bad week for austerity, as we can see below the fold….

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Phil BergerAs you may recall, a spokesperson for Senate President Pro Tem Phil Berger had the following to say about a recent effort by folks at the North Carolina Justice Center (NC Policy Watch’s parent organization) to call attention to the impacts of the federal budget sequester here in North Carolina:

“We are not engaging in the left-wing N.C. Justice Center’s daily publicity stunts,” said Amy Auth, spokeswoman for state Senate leader Phil Berger, in an email. “They should voice their concerns with federal legislation to our federal legislators.”

Today, comes news from the Department of Public Instruction that North Carolina schools will suffer a $63 million cuts as the result of the sequester — most of it in programs that serve vulnerable children.

Still think all this sequester business is a publicity stunt that doesn’t involve you Senator?

 

NC Budget and Tax Center

Last week, Congress failed to repeal the $85.3 billion in automatic, across the board spending cuts known as “sequestration,” and as a result, these spending cuts have begun to take effect.   Sequestration is the wrong way to go about reducing our nation’s budget deficit—it will hurt North Carolina’s economy, weaken the fiscal position of the state budget, and damage key public investments like K-12 education, job training, and food safety. 

And despite inflicting all this damage, sequestration targets the portion of the federal budget that contributes the least to national deficits, making it the wrong tool for achieving meaningful deficit reduction. Instead, Congress should take a balanced approach to deficit reduction that replaces the sequestration cuts for 2013 with equal amounts of new revenue and smart spending cuts.

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Two excellent (and brief!) new documents from the wonks at the NC Budget and Tax Center detail the specific impacts of the sequestration cuts that are hitting today and a responsible path out of the mess:

Click here to read “Just the facts: Fixing sequestration requires balance approach, new revenues.”

Click here to read “Taking a balanced approach: Four revenue options for fixing sequestration.”

Of course, both documents presuppose that lawmakers would want to use logic in solving the problem – something that seems increasingly unlikely given the central role of people like this in deciding what happens.

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The Washington Post reports that the sequester confrontation in Washington is a “moment of truth” for the Tea Party. The story also quotes Congresswoman Renee Ellmers as endorsing the disastrous cuts sequestration will bring about.

“Rep. Renee L. Ellmers (N.C.), who is part of the 2010 class of Republicans but not a member of the tea party caucus, said she worries about the sequester, especially since her district, home to Fort Bragg, would be hit hard. But she said it may have to happen.

‘I do believe it will start a very important process that will help our economy to start to grow,” she said. “The debt that we have at the federal level is our biggest threat for our country.’”