A Context for the Budget Fights Ahead
It's important to remember that austerity is a global trend, not a national one. Countries across the globe are spending less on government, laying off public workers, and, generally, shrinking economies.
Of course what's driving austerity is debt. Most Western democracies have borrowed money to pay for government programs, services, and, of course, pension and health benefits. (See my previous piece about demographics.) Using one measurement, external debt, the United States ranks 20th among industrial nations in its debt burden.
So the idea is to shift taxpayer dollars from programs to paying down debt. At least eventually (but that’s another post).
One way to do pay down debt is to grow the economy, investing in key areas (such as education). The United States tried this. Sort of. The $800 billion stimulus program was supposed to boost the economy. Most economists think that program generally worked. The Congressional Budget Office figured that stimulus did work, adding some 3.3 million jobs to the economy during the second quarter of 2010, and may have prevented the nation from lapsing back into recession.
But that wasn't enough for critics. Republicans argued that the economy wasn't completely back … and therefore dismissed the stimulus as a failure. Instead of growth, Republicans argue that the best way to reduce the U.S. debt is to cut government and to balance the budget as soon as possible.
That's the austerity approach. The idea is to cut government spending so then businesses will respond by hiring more people and then economy will eventually grow.
The conservative government of Britain has been a champion of this policy approach. The result? "The British economy has had the weakest recovery of any major economy," The Wall Street Journal reported this week.
"In the two years following the trough of the recession in 2009—and before the 2012 double dip—the U.K. grew by 2.6%, compared to 3.4% for France and 7.3% for Germany. Of the EU members not directly hit by the euro-zone debt crisis, only Slovenia and the Netherlands have performed as poorly."
But this is the course the United States has already set. (Our choice now is between severe austerity or austerity light.)
The deal this week to resolve the fiscal cliff sets cements the sequester, or across the board budget cuts, and that will begin in March.
Unfortunately Indian Country will be hit by these global forces without any ability to reshape the direction.
The National Congress of American Indians has been calling on Congress to exempt Indian programs from the austerity ahead. Just last month, NCAI President Jefferson Keel said: “Tribal programs make up a miniscule part of the federal budget – for example the Indian Health Service is 0.12% of federal spending and Bureau of Indian Affairs is 0.07%,” Keel continued. “An 8.2% across the board cut would mean deep cuts to critical tribal programs and will disproportionately impact already vulnerable Native communities."
And, in a different climate, the Congress might respond in a positive fashion to this request. But the problem for Indian Country is that the cast of austerity is already hardening.
Democrats have given up on the idea of growing the economy and are now arguing about how to implement austerity light.
"The U.S. will have about $348 billion in austerity measures this year — roughly $200 billion from spending cuts, $125 billion from the end of the payroll tax cut, and $24 billion in taxes from Obamacare. That amounts to austerity totaling 2.1 percent of GDP, a bigger austerity package than Britain, Germany, or Spain has enacted," writes Travis Waldron in Think Progress.
Austerity is coming to Indian Country. Quickly.
Mark Trahant is a writer, speaker and Twitter poet. He lives in Fort Hall, Idaho.