Tag Archives: spending

Paul Krugman: Sanders Needs to Distance Himself from ‘Fantasy Economics’

Nobel Prize winning, progressive-leaning economist Paul Krugman said in an op-ed on Wednesday that the Bernie Sanders presidential campaign needs to distance itself from unrealistically rosy predictions regarding the potential consequences of his economic proposals, or else risk making Jeb Bush’s policy proposals “look realistic.

Krugman takes issue with the fact that the Sanders campaign’s policy director praised University of Massachusetts Amherst economics professor Gerald Friedman’s comprehensive analysis of Sanders’ economic proposals as “excellent work.

According to CNN Money’s Tami Luhby, Friedman predicted that the sum of Sanders’ policies, if passed into law, would push median household income to “$82,200 by 2026, far higher than the $59,300 projected by the Congressional Budget Office.” He suggested that unemployment would drop to 3.8 percent and that the labor participation rate would surge back to 1999 levels.

In addition, [Friedman claimed that] poverty would plummet to a record low 6%, as opposed to the CBO’s forecast of 13.9%. The U.S. economy would grow by 5.3% per year, instead of 2.1%, and the nation’s $1.3 trillion deficit would turn into a large surplus by Sanders’ second term,” Luhby added.

[RELATED: DNC Chair: Superdelegates Exist to Protect Party Leaders from Grassroots Competition]

Following the release of Friedman’s predictions, a group of former chairs of the Council of Economic Advisers under Bill Clinton and Barack Obama, specifically Alan Krueger, Austan Goolsbee, Christina Romer, and Laura D’Andrea Tyson, signed an open letter to Sen. Sanders and Friedman which said, “We are concerned to see the Sanders campaign citing extreme claims by Gerald Friedman about the effect of Senator Sanders’s economic plan—claims that cannot be supported by the economic evidence. Friedman asserts that your plan will have huge beneficial impacts on growth rates, income and employment that exceed even the most grandiose predictions by Republicans about the impact of their tax cut proposals.

Krugman, in his Wednesday op ed for The New York Times, parroted the fears of the former CEA chairs and wrote, “OK, progressives have, rightly, mocked Jeb Bush for claiming that he could double growth to 4 percent. Now people close to Sanders say 5.3???

The point is not that all of this is impossible, but it’s very unlikely — and these are numbers we would describe as deep voodoo if they came from a tax-cutting Republican,” said Krugman, who argued that Friedman’s predictions regarding the growth and unemployment effects of Sanders’ policies are unlikely to take place in the face of a “long-term downward trend” in the labor participation rate due to an “aging population.”

[RELATED: Reality Check: After Being Trounced By Sanders in NH, Clinton Still Wins More Delegates Thanks to DNC Insiders]

Sanders needs to disassociate himself from this kind of fantasy economics right now. If his campaign responds instead by lashing out [against the former CEA chairs’ open letter] — well, a campaign that treats Alan Krueger, Christy Romer, and Laura Tyson as right-wing enemies is well on its way to making Donald Trump president,” concluded Krugman.

On February 3, the Committee for a Responsible Federal Budget released a fact check of offsets that Bernie Sanders has proposed in an effort to fund his single-payer healthcare plan, which stated, “By our rough estimates, his proposed offsets would cover only three-quarters of his claimed cost, leaving a $3 trillion shortfall over ten years. Even that discrepancy, though, assumes that the campaign’s estimate of the cost of their single-payer plan is correct. An alternate analysis by respected health economist Kenneth Thorpe of Emory University finds a substantially higher cost, which would leave Sanders’s plan $14 trillion short. The plan would also increase the top tax rate beyond the point where most economists believe it could continue generating more revenue and thus could result in even larger deficits as a result of slowed economic growth.

Sanders’ chief policy adviser Warren Gunnels called the former CEA chairs “the establishment of the establishment” and told NPR, “[The open letter criticizing Sanders’ embracing of Friedman’s projections] does not bother us at all. What bothers us is the fact that the U.S. has more kids living in poverty than nearly any major country on Earth.

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LOTFI: Dear Neocons, Rand Paul Is Right On Military Spending

During the recent Fox Business News – Wall Street Journal Republican Primary debate, United States senators Marco Rubio (R-Fla.) and Rand Paul (R-Ky.) had what was probably one of the most meaningful exchanges so far in the race to decide the party’s nominee for president.

Paul and Rubio traded jabs over military spending, an issue that has divided many in the Republican party, and there’s little consensus on who won the exchange. That being said, the neoconservatives like Rubio are wrong when it comes to military spending and it’s time the Republican party, as a whole, realize it.

Let’s be clear about something. When Paul says you’re not a serious conservative if you’re willing to spend another $1 trillion, on loan from China, on the Department of Defense (DOD), he says so because the DOD is rife with fraud and waste.

For example, the DOD spent $2 million dollars for every one Syrian rebel they trained. Guess what? The majority of them never showed up to fight on our behalf after being trained. That’s right, $2 million to train one person that never showed up. The DOD also spent $43 million to build one single gas station in Afghanistan, which will never be used. If that wasn’t enough, Congress recently pushed $436 million on weapons that military experts explicitly said are not needed.

Yes, managing our military is one of the few roles the federal government performs today with actual constitutional authority to do so, but does that mean they should continue to receive blank checks?

The DOD clearly has money to flush down the toilet, and the American taxpayers are ultimately responsible for that money.

How is it that conservatives trust no wing of government to operate efficiently, but believe the DOD is infallible? If you’re serious about cutting the deficit and tackling our national debt, then understand this simple fact—government, by design, creates waste. The DOD isn’t exempt from this fact.

Neocons need to stop pretending defense spending is untouchable in order to pacify the multi-billion dollar defense contractors that lobby them for tax-dollars that are not needed to secure our well-being. Even the United States Army agrees.

You’re either serious and principled about cutting waste, or you’re not. And when you’re not, liberal Democrats then get to say, “Well, you spent money we didn’t have on this, so we want more welfare.” The same goes for the Constitution. When Republicans ignore the 4th Amendment and push the NSA, Democrats get to ignore the 10th Amendment and push the EPA. In Washington, I think they call this “bipartisanship.”

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As deadline nears, $1.1 trillion spending bill is agreed upon

To avoid a government shutdown, Republican and Democratic lawmakers have agreed on a $1.1 trillion spending bill.

The new bill was passed in part to avoid the looming political struggle surrounding President Obama’s new immigration policy.  By agreeing on the new spending bill, this struggle will be delayed for at least another month.

Senate Majority Leader Harry Reid of Nevada told the AP, “The federal government’s going to run out of money in two days. … We’ve been trying to work with Republican leaders to avoid a shutdown.”

Republicans are responsible for negotiating the new spending bill which implements a number of new policy measures.  Some of the new measures include, according to Reuters, the easing of environmental regulations as well as regulations aimed at financial derivative trading.  The bill is also adding funds to fight the Islamic State militants as well as funds to help fight the spread of Ebola in West Africa.

According to Politico, the Commodity Futures Trading Commission is receiving a $35 million budget increase from the new bill, bringing their total budget to $250 million.  The Securities and Exchanges Commission is also receiving a budget increase of $150 million, putting their budget close to $1.5 billion.

While some measures are added or changed, many of the original policy measures from the fiscal 2015 domestic spending plan are not hampered or hindered.  This means all government agencies are being funded through September 2015, except for the Department of Homeland Security which is only funded to Feb. 27.

One measure which was excluded from the new bill was the federal terrorism insurance measure passed after 9/11.  The insurance was up for a six-year extension, but instead of being included in the spending bill, the extension will be considered on its own at a later date.

Everything You Need To Know About Bi-Partisan Budget Compromise in 2 min!

Ben Swann here, breaking down the new bi-partisan budget compromise by Republican House Budget Chairman Paul Ryan and Democratic Senate Budget Chairman Patty Murray.

The budget will avoid possible government shutdowns in January of next year and October of 2014 as well. How to accomplish this? Through compromise.

So here is what they are proposing. The big picture here, to reduce the federal deficit by $23 billion dollars over the next 10 years without raising taxes. President Obama praised the bi-partisan compromise, and yet, is it true that taxes will not be raised? Not quite.

The plan calls for raises in “fees”. Yes fees. So for instance, the plan reportedly calls for increases in higher airline fees, which if that is the case, is a tax.

But even so this bill is all about getting spending under control right?

Here is the best part. Remember in 2011 something called the Budget Control Act? you would probably remember it as the “Sequester”. Sequester cuts were set up to create automatic spending cuts balanced between cutting defense spending and domestic spending.

Part of the plan to reduce $23 billion dollars in spending over 10 years is to first do away with those pesky automatic sequester cuts to the tune of $65 billion dollars.

So when you hear all the discussion from media over the next few days about this issue, please, allow me to make this simple. The great bi-partisan budget compromise from Congressman Paul Ryan and Senator Patty Murray attempts to reduce the federal deficit without raising taxes but by charging taxpayers fees.

Ultimately, it will cut $23 billion dollars in spending over the next 10 years but will do so by increasing spending by $65 billion dollars right now.