| Number 249 | March 26, 2004 |
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This Week:
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Greetings, This week’s Notes features a little economic analysis, and lots of resources for those who wish to educate themselves on the ins and outs of the federal budget. It’s long, but it’s kind of a reference piece. Clip it and take it to your next union meeting, or PTA meeting, or wherever you go to make things happen. I believe people need to know this information, and we get less and less of it from the media, unfortunately. This piece was partly stimulated by the fact that several people have written to me in the past couple of weeks saying that they wanted to know where to find more of this stuff. So, you asked for it. I hope to do one more installment in this series on the federal budget, then it will be time for the Spring 2004 Nygaard Notes Pledge Drive. So I hope your April household budget will include some funds for independent journalism! More on that in a couple of weeks... I went out of town twice this week, making me consider taking the week off and pushing the release of issue #249 into next week. But, as these things go, instead I came up with a double issue. Another mystery, one of many to be found here at the offices of Nygaard Notes. I hope you enjoy the bonus words. Mysteriously yours, Nygaard |
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Oh, No! From the “Advertising” column in the New York Times of March 22nd comes the following ominous headline:
(I’ll have more on this evolving reality in a future issue of the Notes.) |
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Elsewhere in this issue of the Notes I give addresses of various activist and advocacy groups that have published detailed analyses of the 2005 federal budget. For those who don’t need the details, but want some general opinions from specialists in some of the areas about the impact of this budget, I provide here a few key quotes from the analyses of these groups. The League of Conservation Voters says in the opening sentence of their budget analysis, “President Bush’s proposed budget for fiscal year 2005 once again launches an assault on environmental protection in this country under the guise of fiscal constraints.” From the Natural Resources Defense Council: “The Bush administration's proposed budget for fiscal year 2004 continues the assault on environmental protection that started on day one of the administration.” The Wilderness Society says, “This year, the budget lays out a disturbing under-investment in the parks, forests and wildlife refuges that form a critical piece of what makes America a beautiful and unique country. This budget weakens protection of America's lands and includes provisions that would make it easier to sell public lands for private profit. Then it adds insult to injury by using ‘smoke and mirrors’ budget tricks to try to mask these cuts.” The AFL-CIO says, “President Bush’s budget is not a budget for all Americans. The Bush plan drains resources away from programs and services to strengthen and improve jobs, health care, and education and devotes them, instead, to huge new spending on the very rich.” FamiliesUSA: “President Bush's fiscal year 2005 budget offers no solutions to our health care crisis, even as the costs of health care climb and more Americans lose their health insurance.” The Food Research and Action Center speaks of the phenomenon wherein the “President” fails to put his money where his mouth is: “Published reports just weeks ago had indicated that the President was considering a major hunger initiative to reduce child hunger—a critical and eminently reachable goal priority—in our nation with its great wealth but 34 million people in hungry and food insecure households. But this budget does not move in that direction.” Here’s the American Association for the Advancement of Science: “Every year for the past few years, there have been record-breaking totals for the federal investment in research and development (R&D) because of enormous increases in the past few years for defense weapons development, the creation of new homeland security R&D programs, and the now-completed campaign to double the National Institutes of Health budget. In these flush times, however, funding for other areas of federal R&D has remained stagnant or declined, with increases in some agencies offset by steep cuts in others. The FY 2005 budget for federal R&D would continue these recent trends with large increases for weapons development and homeland security R&D, but flat or declining funding for the rest of the federal R&D portfolio.” The American Federation of Teachers: “Early figures reveal that the Bush administration’s fiscal year 2005 budget once again shortchanges billions of promised dollars that states need to help disadvantaged students and accomplish the goals of No Child Left Behind (NCLB).” The Latin America Working Group: “The Bush Administration’s budget for fiscal year 2005, presented to Congress in the first week of February, contains some discouraging news for Latin America... The Bush Administration has made an interesting choice to scale back Latin America programs in an election year in which the Latino vote is important. Deep in the fine print of the budget, the White House may hope these cuts go unnoticed.” The Children’s Defense Fund: “[T]he Bush Administration's proposed budget puts millions of poor children at risk by not adequately funding vital programs that provide for some of their most basic needs. The Bush budget presents a reckless plan to expand tax cuts for the rich at the expense of the most vulnerable Americans—including the 12.1 million children who live below the poverty line.” |
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Last week’s Part I was a sort-of overview of the 2005 Federal Budget as reported in some of the nation’s daily newspapers. I hope that collage-like approach gave a bit of a sense of the breadth and sweep of the attack on the Popular Government that is being carried forward by the Bush administration. This week I want to give some resources for those who wish to go deeper into the budget. There are many reasons why one might want to go deeper in a particular area. Maybe child welfare is of particular interest to you, and you’d like to have your facts together before you call your senator or congressperson. Maybe you work with poor people, and need some information to effectively organize your troops. Maybe you are working to turn out under-represented communities for the November election, and you need some details to help you bring home to people exactly how the proposed budget affects them. Whatever your reasons, there are many advocacy groups and think tanks who do a great job of analyzing and writing about what is going on with the $2.4 trillion-dollar federal budget. So let’s have a look at what some of them have to say. ENVIRONMENT: The League of Conservation Voters took a look at the Bush budget and noted that, “although changes in funding vary greatly from one environmental program to another, certain broad trends have emerged from the Bush budget.” On their website you will find a collection of details on proposed funding levels for such things as the Environmental Protection Agency, national parks, land and water conservation funds, agricultural conservation, the Arctic National Wildlife Refuge, and much more. The LCV website also gives a good overview of the many ways that a federal budget affects the nation’s choices around energy production and conservation. Get the details at http://www.lcv.org/fedfocus/fedfocus.cfm?ID=2182&c=5. While I’m at it, there are a couple of other reports with good environmental budget stuff. One is the Natural Resources Defense Council’s report “There He Goes Again: Bush Budget Bashes The Environment,” at http://nrdc.org/legislation/abudget04.asp. The Wilderness Society has also done some good stuff, starting with their statement “President's Budget Is Out of Touch With American Conservation Values,” attached to which is a good 8-page report with facts and figures. That’s at http://www.wilderness.org/NewsRoom/Statement/20040202.cfm. LABOR and WORKERS: Say what you will about how the leadership of the AFL-CIO is in bed with all the wrong people, but their website has some of the best and most well-organized information on the 2005 budget to be found anywhere. Comprehensive, loaded with charts and graphs, and written in plain language, the AFL-CIO site provides a good balance of plain old facts and meaningful analysis of those facts. The site looks at a broad range of labor-related issues, from traditional “labor” issues—like workplace safety, wages and training, and the federal government’s relationship to unions—to broader issues that are also crucial to workers—like Social Security, health care policy, and international affairs. Check out their website at http://www.aflcio.org/issuespolitics/bushwatch/2005budget.cfm#ssa. HEALTH CARE: A group called “FamiliesUSA” has a brief (5-page) report that gives the nuts and bolts in this area pretty clearly. It’s got a boring title—“The Bush Administration’s Fiscal Year 2005 Budget: Analysis of Key Health Care Provisions”—but the report itself isn’t boring. It gives lots of details to support its conclusion that “President Bush's fiscal year 2005 budget offers no solutions to our health care crisis.” Find it at http://www.familiesusa.org/site/PageServer?pagename=Bush_budget_2005. FOOD AND NUTRITION: The Food Research and Action Center (FRAC) is a national organization “working to improve public policies to eradicate hunger and undernutrition in the United States.” Their website has a good summary of the 2005 Budget’s impact on Child Nutrition Programs, WIC, Food Stamps, the Commodity Supplemental Food Program, the Farmers Market Nutrition Program, the Emergency Food Assistance Program, and the Community Food and Nutrition Program. Find them at http://www.frac.org/. You’ll see some articles specifically on the budget, and lots more. RESEARCH AND DEVELOPMENT: Whether it’s computers or flame-resistant
pajamas, you can bet that most of the basic research that brought you
your modern conveniences was paid for with tax money. Many people fail
to understand the crucial role that the federal government plays in
funding the R & D that is so basic to the functioning of the economy,
but the American Association for the Advancement of Science has a wonderful
website that spells out what is happening in this realm. The picture
is not a pretty one, but it’s worth looking at. Go to EDUCATION: I know that Bush’s Education Secretary recently claimed that the American Federation of Teachers is a “terrorist organization,” but they still have published a dynamite analysis of the effects that the 2005 Bush budget would have on public education in the U.S. Even before the current budget was officially released, the AFT put out a state-by-state chart “showing the gap between Bush’s 2005 budget for NCLB’s Title I—which is targeted for disadvantaged students—and what is needed to fully fund the program.” It’s an eye-opener, for sure. See it at http://www.aft.org/press/2004/011204.html. LATIN AMERICA: The Latin America Working Group has a short and concise summary of the priorities for Latin America that are revealed in the Bush budget. LAWG finds that funding for military activities “remains steady,” while “the major programs for humanitarian assistance, providing aid to address poverty and fund development, have taken a hit.” What a surprise, eh? Find their summary at http://lawg.org/misc/budget_analysis.htm. THE KIDS, THE KIDS! The hard-working Children’s Defense Fund put out an amazing report last month entitled “Robin Hood in Reverse: Bush Administration Budget Choices Take from Poor Children to Give to the Rich.” I guess you can tell from the title where they stand. The 10-page report uses plain language to break down the budget as it affects kids in the areas of health, economic security, housing, juvenile justice, education—you name it, they explain it. Find their report at http://www.childrensdefense.org/pressreleases/040206.asp. The Big Picture Several groups have published more general, “big-picture” reports, and I want to direct you to a few of them here. And, by the way, I don’t really agree with the overall politics of some of these groups, but that doesn’t mean they can’t put out some good information that can be useful to good people. So, here they are, and this is just a sample of what you—and any mainstream reporter worth their salt, for that matter—could find if you wanted to. The Coalition on Human Needs has a succinct, detail-filled 40-page report called “THE PRESIDENT’S FISCAL YEAR 2005 BUDGET: Slamming the Door Shut on Opportunity for All Americans.” This may be the best brief summary to be found of the budget’s effect on the “Popular Government,” with sections on Child Welfare Programs, Community And Social Service Programs, Early Childhood And Youth Programs, Education Programs, Health Programs (Medicaid And SCHIP), Housing Programs, Job Training and Cash Assistance Programs, and Nutrition Programs. The report is in “PDF” format, at: http://www.chn.org/pdf/fy05budgetanalysis.pdf. I recommend traveling over to the site of the Center on Budget and Policy Priorities at http://www.cbpp.org/issue.htm. You would do well to start with their “Analysis Of The President's Budget (Revised 3/5/04), but any of their reports are good. Thorough, well-documented, easy-to-read. The National Priorities Project has put out an excellent report called “The President's Budget: Impact on the States,” which includes brief (2-page) reports on each of the 50 states in the USA, with numbers and analysis. Check out your own state at http://www.nationalpriorities.org/Impact04/index.html. The Center for American Progress has an interesting page that is a sort-of “Reader’s Digest” of various takes on the 2005 budget. Entitled “Independent Analysis of the President’s Budget,” it has little snippets from different groups, and lots of links. You can’t go wrong starting here. Find it at http://www.americanprogress.org/site/pp.asp?c=biJRJ8OVF&b=26265 You might want to look at the source of all this: The White House budget documents. Confusing, filled with “spin,” but still, this is the source of it all. Go to http://www.whitehouse.gov/infocus/budget/index.html. Another confusing, but very useful, source of basic numbers is the Congressional Budget Office’s 56-page report that came out earlier this month. That one’s at http://www.cbo.gov/ftpdoc.cfm?index=5151&type=1. |
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You don’t hear the phrase “supply-side economics” as much as you used to, but the policies pursued by the current resident of the White House are in large part based on this economic approach. Therefore, a basic understanding of this economic philosophy is needed in order to understand the logic of the Bush 2005 budget. It’s actually kind of interesting, in a Lewis Carroll-meets-Godzilla kind of way, so let’s have a look. Before we start, let me state a basic premise upon which this examination will rest. I said two weeks ago that a class analysis is essential to understanding the Bush program, and that’s especially important when talking about supply-side economics. By “class analysis,” I don’t mean some sort of sophisticated Marxist framework that requires a Ph.D. in economics—I simply mean that you have to accept the idea that people with a lot of wealth want and expect different things from government than poor and working-class people do. I’ve never thought that this premise should be too controversial, but some who read this will no doubt accuse me of fomenting “class warfare” by bringing it up. So be it. The theory of “supply-side economics” is based on a worldview held predominantly by the upper classes in our society. The elitist basis for supply-side economics is that a small number of wealthy and powerful individuals do and should make most of the economic decisions for a society. The rest of us are considered to be “the rabble,” and can’t be trusted with important decisions about economics. Thus, supply-side economics believes that the key to a vital economy is the providing of “incentives” to the wealthy and powerful people, since they are the ones who build factories and run other businesses that make the economy go. If they are happy (in the economic sense), then they’ll do things that will make us all happy. Or so goes the theory, and perhaps you can understand why it is sometimes referred to by its critics as “trickle-down economics.” This theory has some merit, no doubt. The greatest “incentive” imaginable, in many people’s eyes, is the making of fantastic amounts of money. So (the theory says) if you give members of the owning classes some extra money—through subsidies, tax breaks, or however—they may take that extra money and use to make more money, by hiring people to help them make and sell more things, thus creating jobs. And it’s true; they might do that. Or, of course, they might just keep the money, or spend the money, which won’t do anybody any good, except maybe the waiters on their cruise ships. But, let’s assume that they do want to invest the money into productive activities. What’s the problem with that? One big problem has to do with the nature of The Market, the theoretical basis of which I was taught in high school: it’s “The Law of Supply and Demand.” “Supply” is the stuff that one can buy, what economists refer to as “goods and services.” But what is “demand?” In theory, “demand” is the people who want or need the goods and services. But it’s not, really. In reality, demand is measured in dollars, since it is dollars that buy things, not people’s wants or needs. This may be logical, but it seriously skews the picture. It skews the picture because poor and working-class people, who have few dollars to put into the market, don’t show up very well in the “supply and demand” equation, while more affluent people, with more dollars to spend, do. So the producers—the people in charge of the “supply” of goods and services—make their decisions on what to produce by looking at “markets.” This is quite different than looking at the needs of people. When looking at markets, a producer can do one of two things: She can focus on the things that people actually want and need, make those things, and sell them to the people who want and need them. The problem with this approach—a people-centered approach—comes when the people who have the wants and needs have no money. The other thing a producer can do is to take a profit-centered approach. That is, she can focus on the money, try to figure out what sorts of things might appeal to the people who have that money, then make those things and use a massive advertising industry to convince the monied consumers that they need to buy them. (This, in a nutshell, explains the popularity of the Sport Utility Vehicle, as one example.) Since we live in a profit-oriented economy, it is no surprise that the profit-centered approach is the dominant one. And it works because of the depth and reach of the advertising and public relations industries in the culture, since those industries are what allow producers to create markets for whatever it is they want to sell. So, in summary, here’s the theory of supply-side economics: Give more money to the owning class, and they will spend some of it in some way that will benefit everybody. Although supply-side economics is the theory promoted by our current political leadership, there does exist an entirely different approach to economics, which might be called “demand-side” economics. That theory (a version of which used to be dominant in the U.S. and is sometimes called “Keynesian” economics) says that demand, not supply, is the key to job creation. In other words, if the people with the needs and wants are somehow provided with enough money to allow them to—in market terms—demand them, then someone will produce the “supply” to meet that demand. This seems to me to be much more in line with how the world works. In the real world, here’s what the two theories point to: Supply-siders want to reduce taxes on the owners of capital, sometimes known as “the wealthy,” since they will then attempt to make more money by investing in productive activities that will make the economy grow. “Demand-siders,” or Keynesians, would call for policies that put more money in the hands of people who don’t have much, on the theory that they will then create demand for things they need, which will make the economy grow. The policies that this theory supports might be a higher minimum wage, stronger union protections, better unemployment and welfare benefits, public spending to create employment during recessions, and so forth. There’s a lot more to say on this subject, but maybe now you have a basic idea of the famous theory called “supply-side economics.” I think it’s fundamentally incorrect—the first President Bush called it “voodoo economics” which is an insult to the religion of Vodun, but we know what he meant by the racist epithet. Still, it’s very influential these days, so I figure we’d better understand it a little bit. It’s kind of like getting the license plate number of the truck that hit you. To learn a little more about supply-side economics, check out any of these sites: |