April 21, 2013

Federal cuts put women and children last

In forcing the sequester, House Republicans have ensured cuts to programs that fund breast and cervical cancer screenings, child-care assistance and more.


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Staff Illustration/Michael Fisher

In a narrow way, he's right. You can't continue to spend money you don't have. But the federal government can. When politicians stop likening the federal debt to the balances on consumer credit cards, then we'll make progress toward understanding how to finance the very things we want and need.

The national debt, unlike the balances on consumers' credit cards, actually creates the financial assets that make "we the people" better off.

Consumers' credit card debts are the balances -- the credit -- owed to credit card issuers, a relationship wholly within the private sector. By the simple and elementary rules of accounting, the internal liabilities of the private sector are exactly canceled by the assets of the private sector.

The assets of credit card issuers increase with the increase in consumers' debts. Consequently, there's no overall growth of financial assets. If the pluses in my column are exactly matched by the minuses in yours, how can aggregate financial assets increase?

For private-sector financial assets to grow without private-sector liabilities growing, too, new liabilities, taken on by some entity outside the private sector, have to come into being. That would be the function of federal deficits. Every new dollar of the federal deficit is, also by definition, a new dollar of private nongovernment assets. 

See America's not Cyprus, it's not Greece or even Spain.

If it's dollars versus euros, the outcome's really plain.

We can fill our own till, they need help to pay the bill.

It was bad when the deep cuts came down. 

The private sector's financial assets can only get larger when (and if) the liabilities of the public sector -- the federal government -- get larger, too. The public sector's debt (the accumulation of deficits from years past) exists as interest-bearing bonds. Bond owners in the private sector receive this interest. They (we, us) are better off. Wealthier. Have more income.

Sequester icebergs, not deficits (or bankruptcy or hyperinflation), are the real threat to our economic ship. Cutting the deficit -- or worse, seeking to go further and reduce the national debt -- is simply a recipe to shrink the financial assets of the rest of us (our retirement portfolios, our send-the-kids-to-college funds, our financial nest eggs for future personal rainy days).

Deficit dollars educate our children, support women and feed the elderly. They're our frontline defense against ever-expanding misery, hardship and privation. Growing the deficit now (not forever, but now) is the best way to protect women and children. 

Oh, the moral of this story is as plain as you can see.

Our budget is held hostage by the GOP.

Our cities and our state deserve a better fate.

So get mad at all those cuts that trickle down.

Susan Feiner is a professor of economics and women and gender studies at the University of Southern Maine. 

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