Greenspan Stuffs Badgers!

[georgephillip]

Who knew?

Dean Baker, for one:

"Alan Greenspan has been strangely missing from the fierce battle over the future of public sector unions in Wisconsin and other states.

"His absence is strange because he bears more responsibility for the current conflict than anyone else alive."

Baker elaborates by reminding Americans of the incredible "incompetence" Greenspan displayed by allowing an $8 trillion housing bubble to inflate on his watch, and how Wisconsin's share of our current Great Recession has been a direct consequence of that failure.

"There should be zero doubt: this downturn is the reason that Wisconsin has a budget crisis.

"Perhaps Wisconsin's leaders can be blamed for not recognizing that the economy was being managed by complete incompetents - and planning accordingly - but this is the story of the state budget crisis.

"According to the Congressional Budget Office, the economy is operating at more than 6.4 percentage points below its potential level of output.

"If Wisconsin's state economy was 6.4 percent larger, and its revenues increased accordingly, it would have more than $4 billion in additional revenue in its coffers over the next two years.

"This increase in revenue would easily cover the projected deficit.

"This is even before we add in the savings from lower payouts for unemployment insurance and other benefits that would follow from a return to normal levels of unemployment.

"In short, there can be little dispute that Wisconsin's budget crisis is Alan Greenspan's work."

 

[georgephillip]

"To be clear, states always face financial stress in economic downturns.

"Most states had to struggle to balance their budgets in 2001-2002 and earlier in the earlier 1990-1991 recession. During a recession tax revenues fall. Consumers buy less, which means less sales tax revenue. Workers earn less money, which means less income tax. And property values fall, leading to less property tax revenue.

"At the same time the need for state programs increases. Unemployed and underemployed workers are more likely to need public benefits like unemployment insurance, Medicaid, Temporary Assistance for Needy Families (TANF) and other public support programs.

"Recessions are part of capitalism and responsible leaders prepare for cyclical downturns. However this recession is no ordinary downturn. The recession officially began in December 2007, so it is now 37 months since the start of the downturn.

"At this point following the 2001 recession, the economy was down 1.5 million jobs from the pre-recession level. Thirty-seven months after the start of the 1990-1991 recession, the economy had generated 1.1 million more jobs than the pre-recession level.

"At this point following the 1981-82 recession, the worst prior recession of the post-war period, the economy had 5.5 million more jobs than before the recession.

"By comparison, the number of jobs now stands at 7,700,000 below its pre-recession level.

"Furthermore, no one is projecting that this gap is about to be closed in the next several years.

"There should be zero doubt: this downturn is the reason that Wisconsin has a budget crisis.

"Perhaps Wisconsin's leaders can be blamed for not recognizing that the economy was being managed by complete incompetents - and planning accordingly - but this is the story of the state budget crisis."

Greenspan's Incompetence