A Terrible Thing to Behold
On 7/14/2013, Paul Krugman published an excellent NYT op-ed, entitled, “Hunger Games, U.S.A.”:
Something terrible has happened to the soul of the Republican Party. We’ve gone beyond bad economic doctrine. We’ve even gone beyond selfishness and special interests. At this point we’re talking about a state of mind that takes positive glee in inflicting further suffering on the already miserable.
Somehow, one of our nation’s two great parties has become infected by an almost pathological meanspiritedness, a contempt for what CNBC’s Rick Santelli, in the famous rant that launched the Tea Party, called “losers.” If you’re an American, and you’re down on your luck, these people don’t want to help; they want to give you an extra kick. I don’t fully understand it, but it’s a terrible thing to behold.
For decades, farm bills have had two major pieces. One piece offers subsidies to farmers; the other offers nutritional aid to Americans in distress, mainly in the form of food stamps …
So House Republicans voted to maintain farm subsidies [for the wealthy] — at a higher level than either the Senate or the White House proposed — while completely eliminating food stamps [for the poor] from the bill.
Krugman quotes the standard moral argument for kicking the unfortunate:
To fully appreciate what just went down, listen to the rhetoric conservatives often use to justify eliminating safety-net programs. It goes something like this: “You’re personally free to help the poor. But the government has no right to take people’s money” — frequently, at this point, they add the words “at the point of a gun” — “and force them to give it to the poor.”
It is, however, apparently perfectly O.K. to take people’s money at the point of a gun and force them to give it to agribusinesses and the wealthy.
But, Krugman didn’t mention the economic impact of eliminating $75 billion of food-stamp spending. Yes, it would shrink our projected debt by half a percent ($75B/$15T = 0.5%) and our projected GDP by 1.73 times that much (0.865% = $130B), since the fiscal multiplier for food-stamps spending is 1.73 per Mark Zandi’s 2008 report to Congress and our debt-to-GDP ratio is roughly 100%. That would cause our projected GDP growth for the year to plummet from 2% to 1.135%, a big drop.
Also, this sadistic entertainment would increase our national debt as measured in the only reasonable units, percent of GDP, a.k.a. “debt-to-GDP ratio.” Although we’d be cutting the debt by $75 billion, we’d be cutting the GDP by $130 billion (1.73 times $75 billion). Currently, the food-stamps program not only returns its $75B in terms of GDP but also an additional $55B to boot. So, getting rid of it actually increases our debt-to-GDP ratio.