Reversing Austerity and Rolling Back Cuts – CPC Budget Part 2

Hey Everyone,

So the second part of this series will be focused on the next section within the Congressional Progressive Caucus’ budget which is entitled, “Reversing Harmful Cuts.” 

Now, this section is one in which the CPC deserves much commendation. They include a rare provision to actually repeal the Budget Control Act which was the piece of legislation that gave birth to what we know as the “sequester,” the across the board spending cuts that were automatically triggered when Congress failed to reach a deal on spending provisions; it was the second half of the proverbial fiscal cliff which included the across the board tax hikes that the Republicans were so concerned about.  

Now, before I go any further, I want to introduce a concept known as fiscal drag. It’s the effect of budget cuts or tax hikes (any austerity measures) on economic growth. Those measures, by increasing the amount people have to pay out of their pockets towards taxes or gutting essential economic programs which people depend on, do harm economic growth. Additionally, going off a Keynesian analysis, the deficit reductions also cut aggregate demand in a weak economy; the idea here is that when no businesses or individuals are willing to spend, the government (being the only financial entity capable of spending vast sums of money comparable to the private sector) should be the spender of last resort. These were the theories behind President Obama’s original stimulus plan. 

The problem is that no one can look at the economy and say its doing well. Consumer spending is still down, labor force participation has fallen to new lows, and the unemployment rate’s reductions have largely been based off those reductions as opposed to increased jobs growth. This is still the perfect opportunity for government to spend considering the extremely low interest rates. 

That’s why the sequester needs to go; discretionary spending is already at a terrible point as a percentage of GDP and the United States government has failed to provide for infrastructure investment, critical research, and adequate social safety measures. The sequester only set us back even further. Though I will note that certain bits and pieces of the sequester have been done away with in subsequent legislative deals (like the air traffic control measures). All of it should now be done away with. The CPC sites one particular example of $5.5 billion in cuts that were made to the Affordable Care Act’s preventative health budget alongside $450 million in cuts to the exchanges. One of the awful effects of Washington’s austerity climate is that the public discussion seems to have lost any focus on the economic benefits of the programs they so cavalierly suggest we slash. Preventative medicine actually saves the government money in long term expenditures (which is one of the things deficit hawks keep howling about in the first place); and let’s not even bother mentioning how much the ACA needed better implementation. 

In line with  that thinking, the budget restores funding to SNAP programs and unemployment compensation which actually do provide an almost immediate boost to economic growth as families will usually go out and spend this money on household essentials like food, clothing, gas, rent, etc. There’s absolutely no reason those programs can’t continue to last longer. There is however an argument made regarding dependency on those programs; the trouble  is that, absent other measures to address the shortfall in jobs that pay above minimum wage or clawback rates that turn work into an effective marginal tax hike on the poor, unemployment benefits and SNAP remain our only effective means to ensure that people don’t starve to death and still contribute money, as consumers, to the economy. 

There is one last critical policy to note. In the wake of the debt ceiling debates, the much demonized federal workers have been dealt pay freezes by budget deals since 2011. For the first time in a long time, the budget finally agrees to give Federal workers a raise again. These workers, for absolutely no legitimate reason, were the first ones targeted by cuts and giving them a raise ensures not only better living standards for them, but increased morale which correlates to better performance by our public servants. 

As if it hasn’t been made clear already, austerity is not my thing. I’m firm believer that deficits will decrease automatically as a result of economic growth increasing tax receipts and reducing welfare expenditure. It’s a proven record that kept U.S. deficits low for decades after World War II. But for that, the government actually has to invest in the economy. Reversing the cuts is a first step. However, my concern is that the tax changes brought on by the budget, while likely better for addressing income inequality, may bring too much of a drag too soon on the economy by raising rates too quickly. The concern comes from the budget’s initial stated commitment to lowering the deficit faster than either Paul Ryan or the President’s proposed budget. Even if the budget invokes good spending policies, if the deficit falls too low too fast, that will adversely impact the economy one way or another. 

We’ll have to wait and see. 



No, College Athletes Don’t Need to Unionize

Recently, the National Labor Relations Board ruled that Northwestern’s football players have the right to unionize. While I personally view unions as entities to help workers receive collective bargaining rights and better pay, there are situations where unions are impractical. The arguments made by the football players is that students have to abide by a very strict code in order to remain on the team, without fair benefits. Additionally, the students pointed directly to the fact that the NCAA does not have a very effective policy when it comes to injuries sustained by athletes during competition.

            The first point seems to be false though. These student athletes are correct when they say there are codes and protocols they follow which regular students are not subjected to. However, many of these student athletes from Division I and II schools are given scholarships, which will only be maintained with the voluntary participation in the sport by the student athletes. Yes, these student athletes put multiple hours into their sport, but they also receive a scholarship for their efforts. Many of these programs offer more than scholarships though.  Even Division III athletes can receive perks, such as paid meals during competition, free items such as bags, clothes, or competition shoes. So to say that student athletes, at any level, do not receive benefits for their commitment to the sport is an exaggerated point. I run track at a D3 school, and even yet I still have managed to receive free stuff, despite the fact that I’m not in one of the more revenue making sports. In more powerful collegiate programs, student athletes also can receive special consideration for dorms, class choices and work schedules.

            The second point, however, is one which must be addressed. The NCAA’s current rules on sports injuries is that every athlete must have health insurance, but the schools get to decide how much they will pay towards any injury sustained during a sport. Many colleges and universities do the honorable thing anyways, doing their best to pay for treatment for their student athletes to recover fully. But some places just aren’t as kind, and many other institutions will stop footing the bill once the student-athlete has left the institution, even if the injuries are still present. The NCAA needs to change their policy, to hold institutions more responsible when their competitors get injured, there is not a doubt in my mind. The issue is whether a union at one university be able to challenge the NCAA effectively? As the ruling currently stands, it would leave Northwestern’s football team the right to challenge the institution or the NCAA directly. Perhaps, if a student union challenged just one institution, it would be more effective, I can’t say with certainty. But there would be no basis for the institution to pay for injuries due to NCAA rules. Which leads back to where we started, saying that a union at one school most likely could not challenge the NCAA alone.

            Beyond the realm of college sports though, this ruling has a negative impact on unions. I’ll go as far to say that this decision trivializes unions in the public realm, and hurts their already sliding perception in society. Many individuals already are skeptics that unions just ruin business, and that the ideal way they would work is never implemented. If we allow college athletes to unionize, with all of the perks they already are given to play their sport, I am skeptical how many people would say unions really fight for the worker, and just aren’t “union bosses” who pick on businesses and institutions. Student athletes are attending great institutions, receiving an education, a place to live, and meal plans. Comparing these individuals to someone who is struggling to make a decent wage in order to pay for their children’s education, their place to live, and their meals just isn’t being intellectually honest with ourselves. Yes, they both are working in exchange for something, but an average union worker needs to interact with third parties in order to get all of those living expenses, as opposed to a student athlete who just needs to interact with the institution he or she attends.

            Let me be clear that I sympathize with student athletes everywhere who have been victims of sports injuries and are struggling to get their institutions to help with the burden of medical costs. The real issue here is the poorly written rules in the NCAA handbook, with such a vague statement only requiring student athletes to have health care coverage.  The rules which the NCAA operates under must be rewritten, without a doubt in my mind. However, a union at each institution seems to be an extreme method to achieve change. Until the rules are rewritten, I believe that legally any institution will have the upper hand against a lawsuit brought by an injured student athlete. To achieve change, I would suggest we place scrutiny on the NCAA and their lax rules and bring them to public criticism. I worry that student athlete unions will just give unions a lot of negative press, hurting the people who need them most: the workers. Unions aren’t bad, but in this case I question if they would accomplish anything meaningful or just become a hassle in the already complicated realm of college athletics. Hopefully in the near future, when I go to the checkout line at Walmart, it will be my cashier who is in a union, not myself.

Until next time,


The CPC Budget Part 1 – The Jobs Provisions

Well let’s get right into it. I’d like to start off by examining the first two portions of the Better Off Budget, respectively detailing jobs and the recent budget cuts. I’m linking the actual budget document below which is provided straight from the Congressional Progressive Caucus’ website. It details each of the major policies put forward by the budget and provides the actuarial details that went into the budget, long run projections, and the portions seeing a functional increase in appropriations.

Summary (Short-Form):

Full Document:

Before we get started, I’d like to note that the comprehensive nature of this budget means that it is as much of a policy manifesto as it is a financial statement. That’s the reason I’m going to go through it section by section and the reason this series will take as long as it will.

The Jobs Provisions

Note that there is a $10.10 minimum wage provision in the budget however this specific policy will be reserved for a different article since it needs one all to itself. Recent efforts to create a $10.10 minimum wage in Connecticut prove that the issue is alive and well and the longer the wage goes without rising, the more likely it is that there will be a pertinent article on this blog in the future. 

Now, one of the first things readers will notice is a massive increase in attention to job training programs. Absent any other efforts, I’m fully supportive of increases in employer training programs if only because studies have shown that workers who remain unemployed for long periods of time do indeed see deterioration in their performance, morale, skill set, etc. However, the criticism is that it would be far more efficient just to give these workers jobs and train them as they go. If these workers just go through the training programs with no jobs at the end to show for it, then ultimately all you’ve done is slow down the inevitable decline in their work skills because nothing was done to address the underlying problem of low demand. The workers you train might possess comparative advantages in finding marginal jobs in the short run, but then all you’ve really done is swap these workers in the jobs pool with less skilled workers ultimately leaving the job availability situation the same. 

The next subsection they discuss is infrastructure with what they term an $820 billion down payment in infrastructure spending. They aren’t very clear in the descriptor paragraphs so if one were to scroll down to page 14 on the full document, you’d notice that the functional increases in spending chart documents Fiscal Years 2015-2024 so I’m assuming all spending notations in the budget are in ten year increments. That means their spending increase in infrastructure isn’t nearly enough. The American Society of Civil Engineers noted the necessity of $3.6 Trillion just by 2020. In pure nominal spending terms, $820 billion doesn’t come close to spending what is needed to bring our infrastructure to passable grades. Again however, compared to what we are getting now, it’s still preferable.

This next part is probably one of the better ones. The budget provides for $95 billion in grants to states. During the recession, the federal government ramped up stimulus spending but most states had no choice but to either curb their spending or slash it due to the number of balanced budget requirements on their books. So the states actually counteracted the effects of federal stimulus to a degree by reducing spending and laying off workers. The Recovery Act included grants to states but those have largely been phased out now. The return to this type of aid in the Better Off Budget is a policy we’ll need almost in perpetuity until the following happen (individually or a combination): we return towards something resembling full employment, we stop putting so much pressure on states to meet certain requirements or fund programs like medicaid that should honestly be managed at the federal level since they are funded at that level. I can’t however say anything right now about how adequate $95 billion in aid will be towards easing pressure on the states. 

Finally, this last section is my preferred method of dealing with the jobs situation. It takes a direct hiring approach whereby the government simply hires workers for various purposes: teaching, public works, filling government positions that had been emptied out from cuts, etc. This was the New Deal’s original strategy and would go a long way towards permanently resolving our abysmal labor force participation rate than would simply training workers to look for jobs that aren’t out there. Now, obviously the budget doesn’t allocate anywhere near the amount necessary for full employment (and its questionable whether that much should be allocated) but it bases its numbers off of Representative Jan Schakowsky’s (D) Emergency Jobs to Restore the American Dream Act, a piece of legislation I’ll save analysis on for a future post. 

For now at least, I’m ending my analysis of the jobs section by saying this. The stuff in here is good but like most legislation it doesn’t go far enough to achieving the kind of meaningful effect its drafters hope it will. What makes this budget significant however is that it goes further than any of the recent budgets, Congresses, or Presidents have been willing to go and that makes it worth voting for over anything else out there. I have the distinct suspicion that this theme will pervade the rest of the budgetary sections. We’ll have to see if I’m wrong. 


The CPC Budget Part 0 – Quick Overview

Dear Readers,

It’s absolutely wonderful to be back writing for Roosevelt Talk. I’d also like to welcome you all to our newest series which will spend a couple blog posts pouring through the Congressional Progressive Caucus’s (CPC’s) newest budget, the Better Off Budget. Before I start the main part of the series, I wanted to give you all an overview of the kinds of things we’ll be covering as well as some background information. 

Each year, the CPC releases its own budget to add its voice to the chorus. Unfortunately, it’s also ignored each and every year. The media generally focus on the plans released by the President and House Republicans, most notable of whom is the House Budget Committee Chairman, Paul Ryan (R). Ever since 2010, Ryan has released a series of budget plans, the most notable of which was his infamous Path to Prosperity, that have come to symbolize the Congressional Republican’s vision should they gain control of Congress and the Presidency in the near future. It was in these budgets that Ryan proposed a massive tax reform overhaul that would have drastically slashed rates and combined them into two separate brackets. It was also where he outlined his extremely controversial plan to turn Medicare into a privatized voucher system. Note that Republicans would dispute that characterization and instead tried the euphemism, “premium support.” You tell me if they sound different. Besides those two, it included the draconian cuts to social welfare programs that earned Paul criticism and fame as the Republican’s go-to budget wonk. 

On the opposite side, stands President Obama. His budget plans have been fairly generic in the sense that they haven’t changed much since he took office. His initial budgets were based largely around the American Recovery and Reinvestment Act.The reason I don’t focus on the President nearly as much as Ryan or the CPC is simply because his subsequent proposals have not called for any radical changes from what he started with. They incorporated and produced minor appropriation changes to his major legislative initiatives (successful or not) such as Dodd-Frank, Obamacare, the payroll tax cut, the Buffet Rule, defense cuts, the sequester, etc. 

The one thing I will note about the President, and this is true of D.C. in a larger sense, is that his focus following 2010 shifted from stimulating the economy to retrenching spending and curbing the deficits. In a global sense, the same thing was occurring with austerity fever in Europe. We in the United States haven’t had it nearly as bad and our efforts were termed “austerity-lite” by the Economist until the sequester took an even bigger whack at the budget in 2013.  

It’s this shift that has to change. The budget deficit dropped at its fastest rate since World War II following the sequester but the American economy clearly isn’t in any sort of healthy state. Labor force participation is pitifully low compared to statistics from “better” times. Banks and companies are still sitting on mountains of capital to pay off old debts accrued during boom times and consumers are still not willing to spend enough to bring us back into a full swing recovery because they’re stuck with housing, medical, credit card, and student loan debts. Larry Summers took one look at the situation and termed it secular stagnation. None of the budgets put forward by the President, not to mention the House Republicans, come anywhere close to addressing these problems. 

As the writer behind the CPC series, I will admit I have my fiscal preferences. The United States Federal Government is the only entity that can spend in this economy whilst consumers and private enterprises are occupied with savings. Retrenching spending, especially on programs that already received lackluster attention for the past decade, will only make things worse. Tax hikes won’t do us much good either. The deficit can only be fixed in the context of a good economy. Otherwise its the government’s responsibility to be the “spender of last resort.” 

There I said it. That viewpoint is the reason the CPC’s budget intrigued me as much as it did. I will use this series to analyze the Better Off Budget’s policy alternatives. Full disclosure: I have my doubts and I fully understand that the current political climate means the budget is certainly DOA (dead on arrival). But it’s worth exploring don’t you think? 

I think so too. Now, that I’ve given you the context, I’ll be able to dive straight into the details next time. Till then!


America’s Inadequate Tracking System

WE ARE BACK! Our hiatus has finally ended and I’m happy to present one of our newest regular writers, Peter. Peter’s a colleague at the Roosevelt Campus Chapter and a fellow freshman at Hendrix this year. He’s kicking off a weekly series of articles he’ll be writing with the one below on tracking in American education policy. I hope you enjoy his work and find it as engaging as I do! 

– Chirag

America’s Inadequate Tracking System

Many individuals have taken the stance that the American tracking system in public Education is a flawed evaluation process which must stop. Tracking is an evaluation system where test scores and grades are compiled annually by teachers and guidance counselors to help students succeed in school. The intent behind the practice is that students will be guided into coursework which will fit their academic needs, and thereby will utilize their skills and talents to their maximum potential, making every student succeed based on their strengths.

Yet, the system is failing in almost every regard. Tracking simply is a compilation of test scores, without any real deliberation between the counselors and the teachers. Sometimes, the counselors are just administrative positions, who engage infrequently with their students. Honestly, the tracking shows a few standardized test scores and a GPA, but nothing about the actual student’s progress or interests is included. I was blessed to have parents as teachers, who in addition to excellent teachers and counselors, were able to help guide me through my academic career to make decisions to expand my knowledge, follow my interests, and refine my skills.

Some schools, such as New Trier high school in Winnetka, Illinois, have done an excellent job tracking students at all levels. Using a five level class structure, they require students to engage with their guidance counselors to discuss their academic interests and struggles, and are given suggestions based on test scores on what classes to take next year. The process prepares students by pairing them with the appropriate challenges in school, without leaving anyone overwhelmed or underwhelmed. As a whole, New Trier is ranked one of the best public schools in the nation.

Other nations have adopted a more engaging tracking system, where the evaluations are less standardized and require more student-counselor interaction. Finland is widely viewed as a nation with one of the best Education systems in the entire world. A major component of their success comes from the mentoring program they have. In Finland, every student is assigned a guidance counselor, who will interact regularly to discuss the interests of the student. Not just simply what is interesting and what is mundane in the classroom, but just simply what fascinates the student in life, and what leaves the student bored. This complex tracking system relies very little on test scores, since Finland rarely does standardized tests, but requires more collaboration between counselors and teachers, along with interaction between counselors and students. The Finnish system leaves almost all students prepared for post-secondary life, whether they attend college, trade school, or community college.

I see benefits through a tracking system. However, many of these benefits only reveal themselves through collaboration and interaction amongst counselors, teachers and students. Any tracking system minus the human component will just struggle to adequately serve every student. Unfortunately, America’s Education system has adopted this incomplete tracking model. Schools like New Trier have demonstrated that the model can be adjusted to be more effective and benefit more students. The improvements may be costly, I will concede that. But by tracking students in a more effective way, we will see student achievement exponentially increase, and these gains will benefit our nation as a whole. These benefits outweigh any cost, and government at all levels should find places in their budgets to cut in order to pay for these changes to the tracking system. The student achievement will allow the United States’ economy to expand, and the additional influx of revenue will be a great return on the investment of each level of government. So why are we waiting?  Let’s take the outline of tracking and finally fill it in with substance in order to greatly improve the quality of America’s Education system and see the benefits of a system which is meant to cater to all students.

Just something to think about,

Peter pages 8-13

The Postal Crisis Part 2 – The Banking Solution

As you will remember, I wrote an article last week describing how the Post Office’s financial situation is largely self-imposed and reversible. However, just getting rid of the constraint that I described would provide a temporary reprieve since it’s fairly clear that electronic communication will increasingly cut into postal profits in the future. Senator Bernie Sanders (I-VT) put out a list of potential new services the USPS could provide including granting hunting or fishing licenses, notarization services, and better online integration. However, beyond even these ideas lies an even more innovative proposition: the Postal Bank, an idea put forward by Senator Elizabeth Warren (D-MA).

A Postal Savings System (PSS) is not a new idea. The United States utilized such a service between 1910 and 1966 whereby the USPS accepted deposits and then redeposited them back into local banks; the scheme was then financed through interest income. Savings peaked around World War II and their subsequent decline resulted in Congress repealing the PSS in 1966; unclaimed deposits were then held in trust and claims were honored till about 1985.

However, there is reason to believe that there would be demand for an idea today. A white paper published by the USPS’ Inspector General found that 68 million Americans don’t have accessed to even the most basic of banking services and are forced to spend nearly ten percent of their income for cash services from things like payday lenders thereby resulting in a $89 billion drain from the economy. To give you an idea of the differences in interest that the average person would pay, the payday lenders and other immediate cash services charge interest rates approaching 100% and over but the PSS back in the day actually paid back 2% interest on deposits.

In terms of hard numbers, this would save those Americans almost $2000 a year through at least three basic services: savings, debit cards, and simple loans. The Post Office would also stand to gain $8.9 billion in much needed profits.

What are the downsides then? Well the National Journal put out a critique of the proposal which basically rested on two basic premises: quality of service and competition for banks. For competition, it’s a non-argument. If banks wanted to provide services to those 68 million, they could easily start now but they aren’t. In fact, their failure to do so only made the 2008 financial crisis even harder on the working poor since many of them had already been in the clutches of predatory lenders for much of the previous decade. It’s a niche that the private banking industry has refused to dirty it’s hands with. If they refuse to fix the problem, then it opens up an obvious market share for the Post Office to capitalize on especially considering that it has 56 years of experience in such things even before the start of the digital age. The second argument against the idea is the service quality.Nearly every argument against the USPS’ service quality is based on anecdotal tales and horror stories. While certainly true individually speaking, do you ever hear about the countless cases the USPS gets right every single day? Of course you don’t; they’re not news worthy. Let’s also not forget that Congress has been useless in appropriating the resources necessary for the USPS to even begin addressing the holes in its system.

At the end of the day, if we want a functioning Postal Service that’s financially independent, then we have to give it the tools and resources to do the job. Either that, or we absorb the USPS back into the government as an agency or we privatize it completely. One thing’s absolutely clear: leaving it in financial limbo does our economy, postal workers, and our credibility absolutely no good. 



History of the PSS:

Office of the Inspector General (USPS) White Paper:

Think Progress Article: 

New Republic Article: 

National Journal Article: 

The Dismaying Fact About Indian Men

James Baldwin couldn’t  have phrased it better when he mused, “I love America more than any other country in this world, and, exactly for this reason, I insist on the right to criticize her perpetually.” I could say the same for Indian culture and a new finding by the Organization for Economic Cooperation and Development doesn’t make things any better. In one of their reports on gender equity, the OECD found that the average minutes per day that Indian men spend on housework is one of the lowest in the world (19 minutes per day as opposed to 82 in the U.S. or 114 in Slovenia).

My gut reaction, and the reactions of my fellow Indians here in the United States, would likely be something akin to…..duh! I’m not one to use anecdotes for justifying societal observations but because the statistic came first on this one, I’ll indulge myself by saying it’s true; it’s true; it’s so painfully true.

And it’s always been like this. Indian boys, and my own experience bears similarity, are usually just not taught to do or expect much housework as they grow older. Lower income households in India have wives or daughters handle the housework. Middle class and wealthier families can generally hire cheap labor (for which domestic housework is usually done, once again, by women) while the men are entirely free from such expectations.

Now, I will acknowledge right now that there are over a billion Indians and so, obviously there are exceptions. In no way do I wish to single out anyone’s own experience or family and tie their characters to the number 19. The statistic put out by the OECD is an average so half the cases in reality will indeed see an average number of minutes worked by men higher than 19. But no one can deny that an average of 19 minutes worked, in which half the cases will be lower than 19 minutes or at zero minutes worked, is so pitifully low that it brings necessary shame and derision upon Indian culture and its treatment of women. The problem is systemic, pervasive, and allows us to easily grasp, among other reasons, why India ranks 132 out of 148 on the United Nations Gender Equality Index.

However, the Atlantic article does bring in an interesting point. If India will not address this problem because of the obvious moral grounds, then perhaps the response by activists should be to highlight the economic benefits of female empowerment. The idea that female empowerment is a boon to economic development has long been a widely credit mainstream hypothesis among development experts. Not only are social and moral goals addressed overtime, but nations benefit immensely when half their populations suddenly see increases in education levels, employment, access to social mobility, healthcare, etc.

The obvious problem is that it’s impossible to fix the treatment of women in India overnight. With India ranked so abysmally, I’m also skeptical of any claims that the situation is improving, particularly considering that most people claiming improvement are looking towards the urban youth while ignoring the vast majority of rural practices. What then is to be done?

If we know the solution to be female empowerment, addressing gender violence, tackling societal and cultural discrimination, etc. then all that’s left is to figure out a way to reach that goal. This is the step where research oriented policy advocates (including yours truly) get stuck. If you have potential solutions ready, how then do you put them into practice where societal, political, and cultural headwinds seem to mute your every move? Besides increasingly aggressive campaigns both within India and in the international community on behalf of Indian women, it’s an answer that I regret to say I don’t have a sufficient answer to….at least for now.


The Source Article: