Archive for February, 2011


Scene from the Epic of Gilgamesh on a rolled wax seal (Montclair State University Classics Dept.)

Beginning around 12,000 – 14,000 B.C.E., animal husbandry had developed in central north Africa. By 9,000 B.C.E., agriculture had matured in Mesopotamia to the point that it allowed the construction of some of the world’s first cities. Agriculture afforded the new city states the luxury of free time. No longer did everyone have to hunt and scavenge for food each day, because there were now reserves of grain that aided people when game was scarce. No longer required to be hunters, many urban dwellers could specialize and they often constructed tools and implements that farmers could use, so there developed a symbiosis between the city and the countryside.

That symbiotic relationship figures heavily in metaphorical form in the Epic of Gilgamesh, where the to key characters (both male) Gilgamesh and Enkidu represented the city (Uruk) and Enkidu the country. The Epic highlights the mutual interdependence of the city with the country by informing the reader that the two characters were surprisingly intimate (shall we say liberal?) for what we may today naïvely consider the perceived mores of the ancient Middle East. But this metaphor is representative of the founding of urban culture itself – the interdependence of roles in society, despite farmers and urbanites living very different lives.

One of the world’s oldest extant pieces of literature, the oldest cuneiform tablets with early portions of the story date to as far back as 2150 B.C.E., though the oral tradition may be far older. It also describes an account similar to the Biblical flood – though its clay tablets were enscribed before the Bibllical scrolls. Most of all, the Epic of Gilgamesh describes some beliefs and conditions (natural and supernatural) that people enscribed into clay tablets very long ago. It is worth a read simply to find out how people thought and communicated back then and to learn what things in society then are similar to today and what things are different.

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Nearly 100,000 people rallied in Madison Saturday (AP via Huffington Post)

The Events

A HUGE rally took place on Saturday in Madison, Wisconsin as unions continue to fight against the elimination of their collective bargaining rights. It was the largest demonstration since Governor Walker initiated his proposal, with up to 100,000 protesters and no end in sight. Other protests continued across all 50 states as well Saturday in solidarity with the state employees in Wisconsin.

The Distraction

Despite the huge numbers of people involved in every state, the corporate media has seen fit to bury the lead by focusing on labor protests in other countries, Libya in particular, without mentioning that they are in fact being driven by labor. When was the last time that you have heard about demonstrations continuing in Egypt? They are still going on. Once the military junta took over, the American press essentially said, “Oh, look! They have democracy now and everything will be ok!” (Glenn Beck excepted, of course.) They ignore that now that the protesters have gotten some reforms and are working on a route to democracy, they are still in Tahrir Square arguing for better working conditions and wages and that is apparently making the Egyptian army a bit impatient.

But all eyes were on far off Libya Sunday, where it is easier now to declare the initially peaceful demonstrators as “opposition forces” because they have been forced to arm themselves to prevent their own extermination. After arming themselves, they have been pigeonholed into a different commonly used media meme: The old labor and democracy demonstrations are now an ‘uprising’.

Koch Strategy

Burying the lead is a tried and true anti-democratic tactic that is used by entrenched media in order to help diffuse trouble for authorities. Despite that 50,000 people protested across the country and that 100,000 people protested within Madison itself and countless thousands of others across Wisconsin this weekend, CNN, the New York Times, CBS, ABC and NBC are under-reporting the events. Fox News is mischaracterizing teachers and nurses as violent and greedy fat cats.

In order to understand why, just consider when was the last time that you saw either a Dixie Cup or a Georgia Pacific commercial on one of their stations. Sure, they will post Union ads, but when the crisis is over, they expect to continue getting ad revenue from Koch Industries. The Koch brothers have vowed to continue their fight, and the media is only one of their tactics in order to end the disagreement over their proposals for workers’ bargaining rights, health insurance and benefits.

The Koch brothers do have things roughly where they expected to be at the moment. The Governor submitted his ghost-written proposal, the Assembly has passed its version of the bill, sticking it to the guys who disagreed with it with the quick vote, but there is that nagging problem of those pesky Democratic Senators. You had better believe that the Koch brothers will buy a lot of ad time to pressure them into returning and Walker will ask the legislature to pass one piece of regressive legislation after another until they do. (However, Walker would do that even if the Dems were present in the Senate.)

The protests are a LOT larger than they expected, too.

The Tea Party, after all, was constructed just for this reason: A trojan horse, riding a wave of popular anger only to turn on the people who elected it in order to support the corporate interests of Koch Industries. The Kochs founded the Tea Party through its PACs and they have already used it to divide and conquer the public. Now, the public must try to divide and conquer the Koch minions like Walker and the Legislature. And the Koch brothers will do *anything* to get their way, so the strategy of the people must be broad-based as well.

How the public can win against the billionaires

Even though the media is beginning to side with the Kochs, their ad revenue would drop remarkably if their viewer/readership were to decrease. People who support the protesters can not expect to have their voices heard on the airwaves, but they should demand that it is. A lot of news today can be found on the internet and there are certainly a good number of places that ARE reporting the labor protests. The places that are supporting the labor movement include, but are not limited to:

The Madison Capitol Times
The Appleton Post Crescent
Harpers
Mother Jones
MSNBC (Rachel Maddow is awesome!)
The Real News Network
The Daily Kos
The Huffington Post
Truth Out
Buzzflash
…and others that I have not listed here, though you can find the links in my blogs. The Daily Show and the Colbert Report have really good fact-checking as well. All of the above news sources should be supported because without them, it would be much harder to get the word out.

The mainstream, mass-market media are not quite so helpful. This includes:
ABC News
CBS News
CNN
The Milwaukee Journal Sentinel (has published quite a few negative editorials)
The New York Times
The Washington Post
…and most of all:
Fox News who have portrayed the protesters as violent.

I have also heard anecdotally that a number of TV stations and local papers have been characterizing the demonstrations negatively. Remember, local news sources need to compete for thin resources and ad-buys are very important. This means that they can be swayed by big money, and the Kochs have plenty of it.

BUT…

All of that ad money will useless if people no longer watch their channels or read their papers. The people can have a lot of influence over programming when they organize. You will be surprised!

People who are marching are doing their part of the job. They are putting pressure on the Government and they are making their voices heard. To help them out, everyone who supports the protesters should do whatever they can to assist. Here are a few things that will take just a few minutes a day:

1. Call on the State Attorney General, J.B. Van Hollen, (608) 266-1221, to begin investigations into ethics violations by Governor Walker regarding the phone call, his tendency to give friends fat pay raises and his handling of the proposal. Call for investigations into the Republicans in the Legislature as well. Are they working with the Kochs too?

The Attorney General is a Republican as well, and the Governor has asked him to find ways to get the Democratic Senators to return. You should not expect the State Attorney General to do something right away, but if people call him, write letters to local newspapers and sign petitions calling for investigations, AND KEEP UP THE PRESSURE, then we may see either Hollen or Walker crack under that pressure and make more mistakes. Then they may accidentally reveal more corruption and links to the Kochs like the phone call did. If more information about either person is exposed, then they may be forced to part ties to defend themselves and then they may turn on each other. That is the goal: The Kochs know that pressure helps people make mistakes. Let’s use it on them.

2. Call for Federal Elections Commission investigations into the political operations of the Koch brothers. Are they donating money to their political organizations legally? We should know. Let us force the Koch brothers to spend their money to defend themselves legally. That means they will funnel less money to their own groups to mess with public elections.

3. Call or write your local Television Stations to ask for fair reporting of the protests. This is VERY important, as important as the protests themselves! Be sure to mention that you will migrate to other news sources if they do not begin treating teachers and care givers favorably. This link to Wikipedia has a list of all of Wisconsin’s TV Stations. Click on the station call sign and you will go to a Wikipedia page on that station that will have an address to the actual station website. You can find all appropriate contact information there.

4. If the media is not reporting, then you have to spread the word. Be fair, be accurate, and if you are not sure on details, describe what you know and what you do not. No one has all of the information, but we all try to do our best and we ask questions when we are uncertain about something. Spread the word via texting, Facebook, Twitter, email, telephone, smoke signals or even two paper cups on a string (not Dixie cups!). Form groups, networks and call lists have dinners, lunches and get togethers and let people know when you find something out.

5. Boycott companies and news sources that support the Tea Party, Scott Walker and the Budget “Repair” bill. I have already posted a partial list of companies with links (it is my most popular article so far) and I also have a post on Koch Industries and their related products for more information. The Kochs love the idea of free markets with no regulations. Let us use a market-based approach to show them what happens when they try to take away rights in ‘free markets’! They count on us to buy their products, so if they support taking away benefits and wage-bargaining rights, let us have an impact on their pocketbooks too.

6. Remember who supports the Budget ‘Repair’ Bill for the next elections! AND NEVER, EVER VOTE TEA PARTY AGAIN! That will be soon. Put this on your calendar: There is a State Supreme Court Election April 5th. Prosser is a part of the Court’s conservative majority. Vote Kloppenburg to reduce the power of the Tea Party in the court. VOTE!

7. RECALL Current Legislators and (eventually Governor Walker). The Daily Kos has provided links and information regarding the Republican Senators who can be recalled this year.

8. Discuss this with everyone – even your conservative relatives. This is a civil rights issue and billionaires are trying to take rights away from workers.

9. Wash, rinse, and repeat. This is a waiting game. It will take a while because billionaires have deep pockets. We essentially need to make it very expensive for them to meddle in the political system so that they stop doing it. You have two choices: Stick it out for the long haul and win OR the Kochs get their way and everyone will eventually have an impact to their livelihoods (especially the Tea Partiers themselves).

Remember, the more organized the public is, the easier it will be to get rid of Walker, the Kochs and their cronies. Everyone who supports the state employees should help because once the Kochs take care of them, they will come after the next group. They are all about power and they are working hard to take it all for themselves, so you have to work hard as well to keep your rights.

There are more of us than them. Public opinion strongly favors the workers. Tell other people you know about how they can help. We can do this and we are all in it together.

VY Canis Majoris highlights this paradigm-shifting video (via blangled on YouTube)

We have heard from elementary school that the Sun is an average star. Some people may be bothered by the fact that there is very little about the Sun that is superlative, but it should not bother you too much. Other people are curious about just how large other stars can be. At the moment, a red supergiant star, VY Canish Majoris holds the record. If placed inside our Solar System, the star would extend to the orbit of Saturn! At 30-40 times the mass of the Sun, it is also a very massive star, though it has an amazingly low density, about 1/10,000th the density of air at sea level on a warm day. Click on the image to see just how large CY Canis Majoris is relative to the Sun, its planets, and other stars.

Wikipedia: VY Canis Majoris

Budget Battle (Clay Bennett, Chattanooga Times Free Press)

This article is Part II in a series of articles regarding government spending. To read the other related pieces, go to my U.S. Federal Debt: Sources and Solutions page.

Current status

Buoyed by their 2010 election success, the Republicans (who ran on jobs and the economy) have come to Washington to take it down. House Majority Leader, John Boehner (R-OH), has called for $100 billion in cuts to discretionary spending. Ron Paul has suggested not raising the U.S. federal debt limit, which would precipitate a worldwide crisis as the nation defaults on $14.3 trillion in debt. The fervor does not end there: Iowa’s Steve King (R) even suggested we should “kill the government” should Obama fail to kill health care reform – a move that would add up to $1 trillion to the federal debt after 10 years. The cuts that are proposed are standard: Education, unemployment benefits, housing and (oddly) also cuts to entitlements that are not discretionary spending. Social security and Medicare have long raised the ire of Republicans who would love to privatize the systems and transfer the wealth they contain to the private sector. The largest portion of federal discretionary spending, the military, remains largely untouched through all of this.

So where do all of these cuts leave the jobs issue? Well, the “strange” unemployment numbers from January were not strange at all. The current situation is entirely consistent with the viewpoint in which so many people have been unemployed for so long that not only are they no longer eligible for unemployment benefits, but they are also giving up their jobs searches. That is prior to pending federal budget cuts. The forecasts for the currently proposed GOP cuts will involve the layoff of around 650,000 federal employees alone and the decrease in federal spending will bring the total to nearly 1 million jobs after 2011. This clearly does not jive with the Republican platform of helping jobs, but it is entirely consistent with the Republican mantra of “small government” that has been sweeping that nation and is most evident in the events taking place in Wisconsin.

We will take a look at the history of federal spending in order to find new methods to reduce the federal budget deficits in a what that will encourage growth in the national economy.

U.S. Federal Spending

Fig. 1: US Federal Outlays and GDP since 1901 (Wikipedia)

The U.S. Federal Government spent roughly $3.6 trillion in 2010. Big Government, you protest? Figure 1 shows the history of federal spending since the beginning of the 20th Century (please note that this is a logarithmic plot). The spending on the federal budget has grown in rough proportion to the growth of the economy since the time of FDR, though GDP numbers were not taken prior to that time and the rate of growth of government spending was much lower prior to 1900 because government undertook very few social spending initiatives before then. Also note the point of inflection at 1980. Prior to that time, the rate of GDP growth was accelerating as opposed to the deceleration we have seen since Reagan’s election.

Fig. 2: U.S. Spending and Revenue in %GDP (Bureau of Economic Analysis, via Carried Away)

Figure 2 shows the full level of spending by state and federal governments in the U.S. as a fraction of GDP since the beginning of the Great Depression. It clearly demonstrates that while there is growth in spending during the expansion of the military and programs such as Social Security, the overall spending per GDP by states has held roughly steady since the early 1970s and in the federal government since the election of Ronald Reagan in 1980. This essentially means that the cost per person of the federal government would have remained constant since the early 1980s, provided that middle class incomes would have tracked with the growth of the economy. This has not been the case. As a result, federal programs since the time of Reagan have become more expensive for the middle class while the middle class receives fewer services.

Fig. 3a: Total U.S. Spending, 2010 (Congressional Budget Office, via Wikipedia)

Fig. 3b: U.S. Discretionary Spending, 2010 (National Priorities Project)

That last point on the middle class receiving fewer services is doubly demonstrated by the proportion of military spending relative to total discretionary spending. I will discuss that in a moment, but I will first make a side observation. While researching U.S. discretionary spending, I noticed that the spending is usually displayed either of two ways. The first is the “Federal Pie Chart” in Figures 3a and 3b that show the relative sizes of various categories of total and discretionary spending respectively. The second form of presentation can be found in Figure 4. In short, the portrayal of discretionary spending in either mode is almost always the same and it has the effect of creating a politically expedient frame within which to understand the data.

Figures 3a and 3b represent to shares of total and discretionary spending (respectively) that are spent on a number of different budget categories. This is useful if you were concerned about how much money is spent on programs such as entitlements like Medicare, Medicaid and Social Security or how much is spent on paying off interest on the debt. But the pie charts do not indicate what fraction of the “Discretionary Budget” in Figure 3a are actually spent on Homeland Security or other non-Department of Defense national security areas however. So one gets the impression that defense spending is not so large relative to the entitlement programs shown in 3a.

Figure 3b show us a little more detail, essentially expanding the blue and orange sections from Figure 3a. Here we see just how much of the discretionary budget is taken up by the military but it does not include, say transportation programs that are geared to beefing up Homeland Security. This leads one to the conclusion that military spending is somewhat lower than it really is.

Furthermore, the pie charts only represent funding from a single year. It is impossible to tell how much spending might have changed either from the previous year or from a time several decades ago. And if the accounting is done right, then as I mentioned in the previous two paragraphs, it is easy to give the impression that everything is normal and there are no imbalances in the budget.

Nor would we get that that impression if we were to look at the other way in which the data is displayed: Historically. Figure 4 shows the relative proportions of military and non-military spending, with the caveat that the data is broken down in essentially the same way that it was in Figure 3b (the Department of Homeland Security is not part of the Department of Defense). However, the earliest date for the data is very important. It occurs at a time when the U.S. was in an arms race with the Soviet Union and at a time when it was becoming actively involved in the Vietnam War. The center panel of Figure 4 gives the strong impression that defense spending is under control, but only because it ignores the times prior to 1962 (the 1950s and prior to World War II when the fraction of military discretionary spending was about 30%) when spending on defense was much lower. And keep in mind that we are not including all national security spending in the defense sector – a trend that became worse and worse during the 2000’s. In fact current national security spending comprises nearly half of the “non-defense” discretionary outlays.

The bottom panel in Figure 4 drives home another convenient point that mandatory spending is out of control as well, but this is only due to the fact that defense spending has been considered a high priority among neo-conservatives. But the story behind Figures 3a, 3b and 4 is that even among discretionary spending, the military is consuming a larger and larger share even while spending on social discretionary programs becomes more expensive for the middle class and even while the middle class is expected to carry an increasing responsibility for funding these programs.

Fig. 4: U.S. Military and Non-military Discretionary Funding since 1962 (Office of Management and Budget, via Congressional Quarterly)

Another thing to consider is that all of the social programs that make life easier and demonstrably improve the quality of life for people who live in the United States (i.e. Education, Income & Labor Security, the EPA, Transportation and the Federal R&D) make up a very small fraction of the budget overall.

The take away message here is that despite the initial outward appearances, Figure 5 (the misspelling in the Figure is due to the Economist, not me, though the numbers are sound) shows that discretionary social spending has been very squeezed as a fraction of GDP over the past 40 years, ending with a brief and temporary counterpoint that corresponds to President Obama’s stimulus package. This overall decline has been due to the tax cuts that we will discuss later on which have limited the amount of money that can be spent on social discretionary programs, out of deference to mandatory spending and defense and national security.

Fig. 5: Non-defense Discretionary Spending as a function of GDP (The Economist)

Things are no different in either the current Republican or Democratic proposals for the upcoming budget deal. Social discretionary spending, comprising a small fraction of the total budget, will take the biggest lumps in upcoming budget cuts. That means housing programs, unemployment benefits, research and development, infrastructure investments, clean energy and environmental protection are going to lose funding relative to continued spending on the U.S. Military. The Republicans are aiming for broad cuts of $100 billion to the $660 billion non-military discretionary budget but the cuts are not planned to go toward the national security components of that budget.
The Minnesota Independent has a brief summary of some of the expected cuts which correspond to a roughly 30-50% hit to social programs that are used by everyone in the country and the regulatory agencies that protect our physical and fiscal environments, while the military budget of $689 billion will remain virtually untouched even though the U.S. spends the same amount on its military as the rest of the world combined (Figure 6). Feeling safe yet?

Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and not clothed. This world in arms is not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children. This is not a way of life at all in any true sense. Under the cloud of threatening war, it is humanity hanging from a cross of iron.

–President and Five-Star General Dwight D. Eisenhower, From a speech before the American Society of Newspaper Editors, April 16, 1953

Fig. 6: World military expenditures of every nation in the world, 2009. The tall bar on the far left is the United States, which spends more than 6 times as much as its nearest rival, China. Click to access a larger version. (Global Security, via Think or Thwim)

Impacts of Federal Spending on the Economy

Despite conservative beliefs and mantras, government spending has a legitimate place in the national economy if for no other reason than the fact that, according to the U.S. Census, the U.S. federal government has 2.5 million employees in addition to the military which has 1.5 million active and 1.5 million reserve personnel. That corresponds to nearly 5.5 million total employees, not including part time civilian staff, and that corresponds to more than 3% of the U.S. workforce.

More importantly, Figure 1 shows that current federal spending is at a level of roughly 20% of GDP so it can act as a strong lever arm to encourage economic growth, industrial development, support workers wages and to develop public infrastructure, especially in concert with the government’s regulatory powers. Yet here is what House Speaker John Boehner (R) says about spending:

“This is where cutting spending will create jobs because it is going to bring greater fiscal responsibility here in Washington, DC, end some of the uncertainty, and allow jobs to be created in America.”

Even Cliffs notes will tell you that decreased government spending shrinks the demand for labor in the economy. During times of economic crisis, this can lead to a downward spiral because a smaller workforce leads less consumer purchasing that, in turn, leads to lower corporate profits and less investment and possibly more layoffs which feed back into the system. The Keynesian economic view argues that the Government can borrow money maintain spending levels despite a drop in tax revenue in order make up for the consumer demand that is lost to unemployment.

One could in principle spend money on just about anything, but the most effective approach is to make investments into public infrastructure that essentially build new efficiencies into the national economy that everyone can share in the future. This is the idea behind financial stimulus, but some forms of stimulus are better than others because some forms of spending allow the money to pass through more hands in the economy in a relatively short period of time and that encourages economic growth.

Mark Zandi, Chief Economist for Moody’s, published a study that modeled the effects of various forms of stimulus to see which would provide the greatest impact per dollar invested. You may find the results rather surprising in Figure 7.

Fig. 7: Effective rates of return on each dollar invested in various forms of stimulus (Moody's via Huffington Post)

Surprised? Perhaps it is because the best form of stimulus shown is investing in Food Stamps and Extending Unemployment Benefits! These are anathema to the laissez-faire Trickle Down Economics favored by the Republicans, who tend to be acolytes of Milton Friedman. The Bush Administration, in contrast, strongly favored Capital Gains Tax Cuts, Tax Rebates and Tax Cuts on the wealthy, in keeping with the notion of Trickle Down.

So why would food stamps be better stimulus than tax cuts on the wealthy? The reason is that poor people will spend the money as soon as they get it while wealthy individuals will typically save a windfall for a rainy day. In the latter case money is taken out of circulation so it does not typically provide a positive economic benefit. But there is another important benefit. When people become unemployed and can not feed themselves, they die. When that happens, not only does society lose their productivity, skills and knowledge that those people once had, but society also loses the investment it made to train and educate them. That was the situation in the United States during economic disasters like the Panic of 1893 and the early years of the Great Depression, before Roosevelt’s New Deal. Other forms of stimulus are not listed.

The military, for example returns roughly $0.40 on every dollar because every dollar spent on a bomb is a dollar spent on something that was designed to be wasted. Scientific research provides a quick infusion of cash with a return to the tune of approximately $1.60 on the dollar.

One is forced to wonder why the Bush Administration supported non-stimuli such as tax cuts because, despite the conservative propaganda, Friedmanian economics tends to lead to a reduction in tax revenues over the long term. (This is an indication that the middle class becomes poorer over time.) Nevertheless, the Friedmanians do (rarely) have a point. In the event of too much borrowing, there can be a set of diminishing returns. If the federal debt levels require steep payments on the debt, the government can respond by making money to pay it off. This results in depreciation, which if taken too far can drastically increase interest rates and lead to accelerated depreciation in the value of the dollar and a sticky mess for the economy: Stagflation. That was the situation during the 1970s during an economic slowdown that occurred while the U.S. was balancing the debt it racked up during the Vietnam War. War is expensive.

Another way of looking at this is that, as in Figure 8, various forms of stimulus act on the economy over differing lengths of time and some forms even have a longer lasting impact than others. These factors must be considered in preparing a viable stimulus package.

Fig. 8: Cumuluative Effects of Policy Options on Unemployment (Rachel Maddow Blog)

Obama’s stimulus package was considered by some economists such as Nobel Prize Laureate Paul Krugmanas too small to completely repair the economy, and the U.S. economy is still at risk for a double-dip recession as the stimulus has now worn off while unemployment remains quite high. Part of the reason for this is that the stimulus contained a combination of approaches including non-stimulative tax cuts due to political expediency. While enacting the stimulus package, Obama also failed to raise taxes on the wealthy, which would have given more budgetary cover for a larger stimulus package, but it is also unlikely that would have been accepted by Blue Dog Democrats who were already leery about the federal stimulus package.

Obama’s hands are now tied because of the size of the federal budget deficits due to the wars in Afghanistan and Iraq as well as the reduction in tax revenue due to the Bush tax cuts. Having missed his chance and having failed to include enough stimulus required to fix the economy, the U.S. labor force is now locked in a political game of prisoner’s dilemma. If Obama and the House Republicans can find a compromise, then everyone loses (in this version of the game, this is the best possible scenario), but everyone loses a lot if an agreement is not made soon or if Congress fails to increase the federal debt limit. In that case, the U.S. could eventually be forced to use money locked in the Social Security Trust Fund to pay off existing debt. This is considered a goal by some conservatives because it may force the privatization of Social Security.

What to expect from a short-term federal shutdown

Here we are: In a situation in which the recently elected representatives to Congress care far less about stimulus and investment into the economy than spending money on special interests – especially the anti-stimulative military – and ensuring that “Obama fails”.

So if the current budget impasse continues due to the stark divide between the emerging conservatism of the White House and the bottomless pit of nihilism of the Congressional Republicans, what are we likely to see in a short-term federal shutdown? The Minnesota Independent has summarized a 1999 Congressional Research Service report on past federal deadlocks. (Note, there is a typo in he Minnesota Independent report. The November 2005 shutdown should read November 1995.) A 5-day shutdown caused the furlough of 800,000 federal workers while a subsequent 21-day shutdown led to 284,000 furloughs and 475,000 others were forced to work in critical positions without pay. This of course means lost tax revenue for the government in addition to the extra costs that are incurred by the need to pay additional contract extensions and fees. (Cutting programs often results in similar additional costs.)

The Congressional Research Service also described the impact on the public:

“Health. New patients were not accepted into clinical research at the National Institutes of Health (NIH) Clinical Center; the Centers for Disease Control and Prevention ceased disease surveillance (information about the spread of diseases, such as AIDS and flu, were unavailable); hotline calls to NIH concerning diseases were not answered; and toxic waste clean-up work at 609 sites stopped, resulting in 2,400 “Superfund” workers being sent home.

Law Enforcement/Public Safety. Delays occurred in the processing of alcohol, tobacco, firearms, and explosives applications by the Bureau of Alcohol, Tobacco, and Firearms; work on more than 3,500 bankruptcy cases was suspended; cancellation of the recruitment and testing of federal law-enforcement officials occurred, including the hiring of 400 border patrol agents; and delinquent child-support cases were suspended.

Parks/Museums/Monuments. Closure of 368 National Park Service sites (loss of 7 million visitors) occurred, with local communities near national parks losing an estimated $14.2 million per day in tourism revenues; and closure of national museums and monuments (estimated loss of 2 million visitors) occurred.

Visas/Passports. 20,000-30,000 applications by foreigners for visas went unprocessed each day; 200,000 U.S. applications for passports went unprocessed; and U.S. tourist industries and airlines sustained millions of dollars in losses.

American Indian/other Native Americans. All 13,500 Department of Interior Bureau of Indian Affairs (BIA) employees were furloughed; general assistance payments for basic needs to 53,000 BIA benefit recipients were delayed; and estimated 25,000 American Indians did not receive timely payment of oil and gas royalties.

American Veterans. Major curtailment in services, ranging from health and welfare to finance and travel was experienced.

Federal Contractors. Of $18 billion in Washington area contracts, $3.7 billion (over 20%) were managed by agencies affected by the funding lapse; the National Institute of Standards, was unable to issue a new standard for lights and lamps, scheduled to be effective January 1, 1996; and employees of federal contractors were furloughed without pay.”

Some federal agencies such as those related to defense would continue to operate even under a government shutdown.

Coming soon

In the next segment, we will discuss tax policy in relation to the information that we have covered in Parts I and II. Stay tuned.

References and Links

The Economist: “Outrageous Cuts”

U.S. Census: Federal Government Civilian Employment

U.S. Department of Commerce Bureau of Economic Analysis National Income and Product Accounts

Wikipedia: List of countries by level of military equipment

Wikipedia: United States Federal Budget

Police Union Announces Solidarity with Occupation of State Capitol (via Understory)

Yesterday, the Police have just disobeyed orders to remove protesters who have been occupying the State Capitol for nearly two weeks now. The demonstrators were to be removed at 4pm Friday.

Hundreds of police marched into the Capitol Rotunda and announced:

“We have been ordered by the legislature to kick you all out at 4:00 today. But we know what’s right from wrong. We will not be kicking anyone out, in fact, we will be sleeping here with you!”

They continued…

“This is not a budget issue, this is a civil rights issue. Mr. Walker, let me tell you, we know who YOU work for! We work for all of these people!”

Awesome.

Scott Walker (via mymindstain)

The Wisconsin Governor’s divine aspirations to be the next conservative icon have now met with a dose of reality. It turns out that stripping people of their rights does not make you beloved and it may cause others to attempt to strip rights from you. The rumors that have been flying around Madison today have apparently been confirmed. Scott Walker was booed by the customers of a local restaurant in Madison Wisconsin and was subsequently asked to leave by the owner.

James Heintz discusses sources of state budget deficits around the country (Real News)

The current economic crisis has led to high levels of unemployment, reducing income and sales tax revenues to the states. Tax rates for the wealthy have also dropped during recent decades. State budgets are therefore hemorrhaging cash due to a drop in revenue. Making the problem even worse, the typical state response to the drop in revenue has been spending cuts without tax increases which leads to another decrease in wages in the states. The Real News has interviewed James Heintz of the Policital Economy Research Institute at the University of Massachusetts to investigate the problems in state budgets as well as to explore possible options available to improve both the budgetary situation and the economy.

It turns out that not all solutions have been tried. Conservatives have continually made the case that ‘we must cut spending’ while completely ignoring the revenue side of the budget. This situation is currently being played out in Wisconsin, where tax rates on billionaires have been cut repeatedly during the past 40 years though it is the workers who are now expected to make up the difference in balancing the budget, both in terms of fewer government services and lower wages.

Recall that one of the problems in the current state budget crisis is the loss of wages in the first place. Forcing state employee unions to accept harsher terms only puts downward pressure on wages across the economy. The state should rather find ways to provide positive support for wages and a simple way to do that is through tax increases on the wealthy. Simply increasing taxes to 2000 levels will restore most state budgets to solvency and it will also help to prevent continued layoffs and unemployment in the states while also providing support for investment in badly needed pubic infrastructure.

Decreases in state revenue due to the economic downturn have left many states short (Real News)

Tax increases on wealthy and support for increased wages can help (Real News)

Glenn Beck talks apocalypse porn (Rachel Maddow Show, via YouTube)

In new developments regarding Wisconsin, the Koch brothers, showing no small amount of irony or chutzpah, passed on this message to the public through the National Review:

“With the Left trying to intimidate the Koch brothers to back off of their support for freedom and signaling to others that this is what happens if you oppose the administration and its allies, we have no choice but to continue to fight,” says Richard Fink, the executive vice president of Koch Industries. “We will not step back at all. We firmly believe that economic freedom has benefited the overwhelming majority of society, including workers, who earn higher wages when you have open and free markets. When government grows as it has with the Bush and Obama administrations, that is what destroys prosperity.”

That is right, freedom is slavery. And not having the ability to bargain for wages apparently increases them…somehow. It is plainly apparent what is taking place here. Don’t you see? The billionaire Koch brothers are the real victims here. Just because they have simply paid a puppet to eliminate the jobs of those fat cat teachers and nurse’s aides, redact environmental regulations and curtail public health care so that they can pay a lower marginal tax rate, they are made out to be the bad guys. Oh, and buying state power plants so that they can sell power back to the state at a higher cost and hefty personal profit would be nice, too. Can you believe the insensitivity of those liberals out there? What does a billionaire have to do these days to make a living? Work?

True to form, their fight apparently continues: Governor Walker is now attacking state health programs, including programs for the disabled. Disabled rights activists protested inside the state GOP headquarters in Madison Friday. As we reported yesterday, Walker also has his sights on the state’s currently healthy employee insurance fund. And the attack on collective bargaining continues, even if the state is about to lose $46 million in federal money specifically because it is ending collective bargaining rights for workers! Now THAT is a way to balance a budget!

What we are seeing is a natural end of unbalanced conservatism. The United States is in a race to the 19th century, when the 20th was its greatest time and while other nations are aiming for the 22nd. The conservative movement has become so rapt with its regressive economic dogma that it hires people like Glenn Beck to spew his apocalyptic violence porn because teachers and nurses are marching to retain their rights to collectively bargain for their salaries – “IT IS THE APOCALYPSE I TELL YOU!” We now live in an age where a teacher who claims that he or she has the right to earn a living wage represents the ‘mark of the beast’. That is just how unbalanced the right is and that is why it must be stopped. If enough people march, protest, right representatives and demand investigations, they can be stopped.

Lawrence Textile ("Bread and Roses") Strike, 1912 (via Wikipedia)

As hundreds of thousands of workers protest around the world and within the United States today, we should remember what the labor movement has brought to life in many places: Vacation time, benefits, increasing salaries, pensions, transparency in government and political clout for the middle class. None of these rights came easily as the image here shows and each of these rights are currently under assault. Within the United States, the battle lines are drawn through every state that is controlled by the Tea Party, who would like to undo 100 years of progress and literally return us to the world of child labor. Good luck, everyone, as your protests get underway!

Walker continues his assault on the Middle Class (AP Photo/Andy Manis)

When will the billionaires be asked to share in the burden? Hundreds are protesting outside Koch Industries’ new lobbying office that is located a block from the Capitol in Madison.

Governor Walker, not content to deprive teachers and nurses of their rights to collectively bargain for their salaries is now eager to raid the state employee insurance fund to balance the budget.

The first layoffs have been announced by Walker, including the wife of Wisconsin Democratic State Senator Scott Fitzgerald, Lisa, who is a teacher, in a fine case of political retribution.

In addition, Republican legislators will restrict access to their offices beginning pm Saturday because they are not really about free speech and democracy, unless one is talking about the “free speech” that Citizens United claimed comes in the form of corporate political donations. Vote such as the one last night come about when a political party no longer thinks it requires constituents (or when it really believes that corporations are people).

Democrats jeer at Republicans who leave immediately after an abrupt vote to deny workers the right to collective bargaining (AP via Yahoo News)

The Republicans in the Wisconsin State Assembly voted to deny collective bargaining rights to state employees as well as to begin the sale of state assets to private companies in no-bid contracts. The vote was as abrupt as the Republican departure from the Assembly chamber immediately after the vote. All the Republicans voted very quickly and the count was limited to a very short time so that not all Democrats were even given an opportunity to vote. The Republicans then left, single file under guard, greeted by the throngs of protesters still filling the Captiol Rotunda at that late hour. As the Democratic Assemblymen waved the Republicans off, the protesters greeted the Dems with shouts of “thank you” for continuing a 60-hour filibuster to slow the bill’s passage.

The vote tally is given here for you to see how your Assembly representatives voted. Remember, not all Dems were given a chance to vote, but they had been in unanimous disapproval of the bill. Republicans Kaufert (Neenah), Nerison (La Crosse), Spanbauer (Oshkosh) and Tranel (Cuba City) each voted no, joining the Democrats.

Wisconsin State Assembly Representatives can be contacted via their websites. Be sure to thank them appropriately.

Billionaire contributions to Wisconsin state tax rolls has dropped quite a bit recently (Real News Network)

The Real News has done a great piece in which they describe the poor conditions that currently face Wisconsin billionaires. Oh sure, they have increased their wealth overall, but their rank on the Forbes 400 list has dropped on average by a couple of places. You can only imagine the difficulties! Since 2001 that the estate tax rates on billionaires has dropped by nearly half though they have found ways around them too. This occurs at the same time that state and federal governments cut back on services for the people who really need them. Did you know that the overall tax burden of billionaires has dropped as well at the same time that we are being told that we must “share the sacrifice”? Watch Real News’ Paul Jay discuss whether billionaires are putting in their fair share and watch to the end to see how simple it would be to balance state budgets across the country.

Works Progress Administration (vis Wikipedia)

During the deepest depths of the Great Depression, President Roosevelt created the Works Progress Administration (WPA), the largest federal agency as part of the New Deal. In its beginnings in 1935, the WPA cost $1.4 billion, growing in size to $11 billion by 1943 (this is equivalent to expenditures of $25.6 billion and $136 billion per year in 2009 dollars). This mammoth undertaking employed 8 million people to construct and revitalize the national infrastructure. WPA construction projects, like CCC projects are everywhere – nearly every city in the country has at least one. The workers in the WPA built bridges, libraries, roads, dams, power plants, post offices, parks, schools, and shelters. Many of these projects are still around and in use today. A large people were also employed to distribute food to the needy, there were education programs, and there was a good deal of investment in the arts, media and community theater. By 1943, the unemployment rate had shrunk to very low levels due to the high demand for labor to build arms and munitions for World War II and the WPA closed its doors after building public infrastructure that later fueled the economic boom of the 1950s and 1960s.

Wikipedia: Works Progress Administration

Space Shuttle Discovery lifts off for the last time (Michael Berigan/Reuters)

Space

The Space Shuttle Discovery launched into orbit for the last time Thursday, carrying a new crew to the International Space Station. There will be two more flights before the end of the Space Shuttle program. The shuttle Endeavour is scheduled to make one more trip to space in April, followed by the last shuttle flight by Atlantis in June. The shuttle program was to be superseded by the Constellation program, a series of manned and unmanned missions that were aimed toward bringing the United States back to low earth orbit, then the Moon and ultimately Mars. Citing current private companies such as SpaceX that are developing manned orbital systems, president Obama cancelled the Constellation program. At the moment, it appears United States will not be the first country to Mars.

Developments in Libya

Mu’ammar Gadhafi blamed al Qaeda today for the uprising spreading through his country, saying that Osama bin Laden had brainwashed young Libyans who had been given hypnotic drugs in their milk. Opposition groups now control most of Libya, but Gadhafi’s stronghold is in the capital, Tripoli, where his forces are exacting a heavy toll, though some troops and pilots are refusing to fire on protesters. The death toll due to the government attacks on civilians is likely higher than 1,000. Opposition groups continue to make gains despite the government’s counterattack and they are massing in the opposition-controlled eastern portion of the country. The United States, after a generation of enmity and containment, has found that it has few options regarding the situation in Libya. It has few contacts with the leadership, no aircraft carriers in the Mediterranean, and is forced to rely on nations such as France and Italy that have had friendlier relations with Libya. Even worse, once the opposition forces take over there may not be such a warm and rosy relationship with the new government because President Bush sold Gadhafi weapons. Yes, once again weapons emblazoned with “Made in U.S.A.” are firing at civilians who are trying to form a new democracy. So much for shoot first and ask questions later.

WikiLeaks

Julian Assange has lost his trial for extradition to Sweden. This was expected as most extraditions within the EU are granted. Assange has promised to appeal the ruling and has seven days to do so or else he will be extradited within 10 days.

The Wisconsin Education Association Council is conducting rallies throughout Wisconsin today (Thursday) and there are more rallies already scheduled through Monday. There are also plans for a huge rally in Madison Saturday! Here are direct links to event schedules at the WEAC site and the SEIU site for details!

Also, here is a bus schedule for shuttling back and forth to Madison on the Wisconsin Legislative Councill 11 site.

Good luck!