I will protect your pensions. Nothing about your pension is going to change when I am governor. - Chris Christie, "An Open Letter to the Teachers of NJ" October, 2009

Monday, July 5, 2010

When the Media Gives You Lemons...

I've been meaning to post about this video for a while - pay special attention starting at 2:55, when Brian Donahue interviews the guy in the green t-shirt.

Protesters offer their suggestions to try and close the 13 billion budget gap

Donahue's whole piece is premised on the conservative framework that we need to cut, cut, cut our way out of our fiscal mess, rather than growing the economy. So he's pretty much stymied when this guy on the street, who clearly knows far more about economics than Donahue, gives him a quick lesson in Keynesian theory. Donahue's schtick pretty much stops dead.

Paul Krugman and Digby have both been writing lately about the counterintuitive nature of Keynes's theories: when you're out of money in your household, you cut back, so why shouldn't the government do likewise?

The answer, of course, is that the government is not a household, and that the government should be creating economic activity in the absence of activity in the private sector. And if you're worried about closing deficits, the economic growth you create from smart, targeted government spending will jump start the economy and create more wealth, from which you can draw tax revenues later.

Which is why I think Christie is absolutely right to NOT pay into the teachers' pension fund right now; we NEED to go into debt. Of course, using the savings to give tax cuts to millionaires is a horrible form of stimulus...

This is stuff that the media should at least be putting on the table as a legitimate position to debate.

1 comment:

thinker said...

Interesting. My actions, as it concerns my household finances, has always been to cut AND take a part-time second job, or at least try to generate additional income in some way. Am I the only one?

All I see happening in NJ right now, is that public employees are being attacked (almost daily it seems), and jobs are being lost. Consider this, when tax revenue comes in to Trenton, do they pull out the tax revenue that was paid, or otherwise generated by, public sector workers? Is that revenue somehow different? But by all means, keep on cutting and see if your revenue, and general statewide economic activity, goes up or comes down.

Contrary to popular belief, public sector workers are not spending all their time sacrificing children and stirring cauldrons in their basements. In fact, they pay taxes, and spend money much like private sector workers do. Their money supports the private sector if they spend it on...oh, I don't know, groceries, correct?

I'm not advocating recklessly spending tax revenue to create bogus private or public sector jobs. I'm merely pointing out what should be obvious, but apparently is not, to those who think it's a good idea to slash public workers salaries drastically. It's all about the balance, people.