"Austerity is Insane"

Nicholas Caleb

Last night, the City of Portland held budget hearings at Montgomery Park. Several hundred people attended; so many that testimony had to be limited to a minute. There was incredible energy in the room and impassioned testimony by community members highlighted the programs that will be severely impacted if cuts proceed as expected. One person in particular, Robin Hahnel -- currently a professor of Economics at Portland State and author of many books including Of The People, By The People: The Case For A Participatory Economy -- spoke so persuasively that the audience overruled the request of council for him to heed the one minute limit. His testimony deserves to be published in full:

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When there is still much too much unemployment and no imminent danger of inflation, fiscal austerity is insane! Economic theory predicts it. History proves it. And any competent economist who is not in the service of the 1% will tell you as much.

Five years after the financial crisis of 2008 unemployment remains intolerably high – higher in Oregon than elsewhere. And there is a real danger that government budget cuts will send us back into negative growth and recession, while there is no danger of inflation in the foreseeable future.

In this context for our elected officials in Washington to be focused on long-run deficit reduction -- instead of fiscal stimulus to get people back to work, increase production and income, and thereby increase tax revenues as well – and for our President to volunteer to cut social security benefits – even though the social security trust fund is NOT in deficit and will be solvent for decades – is not only mean spirited, it is bad economics. And make no mistake about it, whether political gridlock leaves us with the cuts meted out by sequestration, or Congress and the White House finally agree on a new budget, the outcome will be more austerity coming out of Washington either way.

Similarly, for legislators in Salem to be arguing over what to cut in the State budget, by how much, is terribly counterproductive. And for local politicians like you here in Portland to be choosing how to cut different programs because revenues are down is tragic.

I know Portland City Counselors don’t get to vote in Washington or in Salem. I know that your fellow politicians in Washington and Salem who persist in counterproductive fiscal austerity have dealt you a bad hand to play from. But you do not serve the citizens of Portland when you merely sit in judgment over which public services and local initiatives will be sacrificed on the altar of austerity. That is not a productive use of your time.

Instead we need you to do two things that are far more productive.

We need you to press your political colleagues in Washington and Salem to do an about face – to address the real problem of unemployment and the real danger of sliding back into full-blown recession, and to stop their austerity nonsense.

While you do not vote in Washington or Salem, you do belong to the same political parties as the Portland delegations to Washington and Salem. You need to let them know in no uncertain terms that political decisions coming out of Washington and Salem are making it impossible for you to do your job, which is to provide decent public services for the citizens Portland. While it is Republicans who have led the austerity charge, the focus on austerity rather than stimulus in both Washington and Salem would never have been this successful had Democrats not failed to standup firmly in opposition, denouncing it for the mean spirited, counterproductive policy that it is – and that includes some Democrats in Portland’s delegations to Washington and Salem who have aided and abetted the rightwing austerity stampede. Of course we voters in Portland must increase our pressure on our representatives in Washington and Salem -- some of whom have been AWOL in the war to revive our economy -- but frankly each of you has more clout with them than each of us does. We need you to help us hold their feet to the fire.

We also need you to stop focusing on what parts of the city and county budgets to cut, and focus instead on how to raise more revenue from those who can best afford it here in Portland and Multnomah County so that every choice is no longer a Faustian bargain.

While elected officials understandably shy away from recommending increases in taxes or fees, you should also fear the wrath of voters when you tell us you are going to cut programs we desperately need and deserve!

Right now it is far more useful for you to focus on how to raise local revenues to avoid further cuts, and how to do it in a way that does not further penalize those who can least afford it. Increasing Trimet fares and charging a head tax per household to keep art teachers in the schools are not how we should be raising revenues in Portland. Lack of leadership from you on the revenue front is partly responsible for those poor stop-gap measures. If you lack for good ideas you should hold hearings on how to increase local revenues fairly instead of hearings like this over what to cut, by how much. If you do, I will be happy to bring a delegation of local economists to testify with a list of better alternatives.

By Nicholas Caleb April 12, 2013