[lbo-talk] liberal austerity

[Max B. Sawicky]

The only thing that will be wired into the Gov's policy is the
stimulus boodle and the Fiscal Year 2010 budget (oct 09 to sept 10).
By that standard this is a ginormous boost in non-defense spending.
There are all sorts of escape hatches for the ensuing years, if BHO
can get the Congress to vote more spending.  "We need this for health
care reform, to save money later; we need to do something about the
climate to save the Earth; we're setting up an infrastructure bank
off-budget" etc. etc.  Once the 2010 increases are in the baseline,
it's harder to roll them back, or to say no to areas that didn't see
above-average increases.

The most worrisome thing I've heard is the WH assuring the Right that
non-defense discretionary spending (which excludes the big social
insurance and anti-poverty programs) will shrink to close to three
percent of GDP, starting in four or five years.  It's a discouraging
signal, though it could turn out to be nothing more than that.

The bottom line is that as far as the BHO non-defense budget goes,
pending Congressional disposition of it, the left has nothing to
complain about.  Zero, except maybe the stimulus is too small.
(Though it may be doubted that Congress would have gone for anything
bigger, first time around.)

-----Original Message-----
From: lbo-talk-bounces at lbo-talk.org
[mailto:lbo-talk-bounces at lbo-talk.org] On Behalf Of Doug Henwood
Sent: Thursday, March 26, 2009 11:40 AM
To: lbo-talk at lbo-talk.org
Subject: Re: [lbo-talk] liberal austerity

On Mar 26, 2009, at 11:14 AM, Politicus E. wrote:


> Hi.  I am reading the CBO report on the Obama adminstration's budget
> proposal, and find myself somewhat puzzled.  On the one hand, I  
> believe that
> an orthodox austerity program might be on the agenda in future
fiscal
> years.  On the other hand, the CBO report does not confirm my view.
> According to their forcasts, which must be taken with more than a  
> bit of
> skepticism in light of the failure of many macroeconomic models to  
> predict
> this economic crisis, the on-budget deficit will be 14.1% of GDP in


> 2009,
> 10.4% in 2010, 7.3% in 2011, and about 5% by the time of the next
> presidential election.

CBO projections are cautious in the sense that they mostly extrapolate

the present into the future. There's no austerity baked in right now,

but it wouldn't surprise me at all to see it evolve in the coming  
months. Important agents of austerity could well be the dozen or so  
Senate Dems who are resisting the leadership's push to make the budget

pass with only 51 votes, and not the full filibuster-proof 60.

Doug
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