Intelligent Discontent

Why We Need Tester and Obama, Part 2: Math

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I’m quite bad at finishing a series of blog posts – a Part 1 doesn’t always indicate the future existence of a Part 2. But this is any important one, and I’m spreading it out on purpose because Part 3 is awaiting critical developments.

So, why do we still need Tester and Obama? It’s pretty clear that our local Republicans have gone off the deep end, but on a national level, are Democrats any better that the GOP? And if they are better, can we expect any benefit for Montana? The answer is most certainly, yes, and not just because they might give us better judges.

Why? Because it is nearly inevitable that in the next six years, some more effort will have to be put in to controlling the national debt, as it has now surpassed our GDP. If the economy continues to grow, the time will come to reduce deficits to ensure that they remain manageable. As sovereign debt becomes less and less trustworthy, the need to do so will be felt more acutely. How we do that is a key consideration. And lets face the math – it will come either through higher taxes, or lower spending.

There is almost no doubt that Montanans in general will benefit from using higher taxes rather than lower spending. Why? Because as this helpful chart informs us, Montana, between 1990 and 2009, received from the Feds (minus taxes paid) the equivalent of almost two years worth of our GDP. That is enormous, and unsurprising. Montana has a sparse population but large infrastructure needs, and as long as people and goods need to go from Minnesota to Washington (two states contributing more to the national budget than they take), it will be in their best interest to subsidize our infrastructure.

But what that means is that budget cuts will affect Montana disproportionately, while tax cuts will have a disproportionately small effect. Obviously, the depth of that difference would be determined by where the taxes were raised or spending cut, but on average the effect of spending cuts would be about 47% greater than the effect of a tax hikes.

And finally, should Montana just bite the bullet because ultimately spending must come down? No. The British were kind enough to try that out for us, cutting top-rate taxes and slashing spending. No need for us to repeat the mistake. (There’s also little reason to believe that progressive voters need to repeat the British electoral mistake – punish the moderate incumbents by moving left and giving an election to the right wing).

I’m loyal to Obama and Tester partly because the stimulus they pushed got me a job, menial but certainly better than nothing, and then helped me get another. The evidence from Europe suggests that this is not merely a personal loyalty; there is evidence that stimulus was much better policy than austerity. That anyone can argue that there is no reason to support the party that pushed that crucial difference is beyond me.

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