Download Link – even small spending

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Dollar DA
Dollar DA ....................................................................................................................................... 1
Explanation.................................................................................................................................... 4
Shell ................................................................................................................................................ 5
2NC – Uniqueness Wall ................................................................................................................ 8
2nc link wall ................................................................................................................................... 9
2NC Dollar brink ........................................................................................................................ 13
Uniqueness- econ strong now ..................................................................................................... 14
Specific links
Link- Social Services ................................................................................................................... 15
Welfare Links .............................................................................................................................. 17
HOMELESS AID LINKS .......................................................................................................... 18
BLOCK GRANT LINKS ........................................................................................................... 19
Computer / Internet Link ........................................................................................................... 20
Disaster Relief Links ................................................................................................................... 21
Drug Trafficking / Border Control link .................................................................................... 22
Food Stamps Links ..................................................................................................................... 23
Violence against Women Reform link....................................................................................... 24
Veterans Cost link ....................................................................................................................... 25
Abortion link ............................................................................................................................... 26
Hyde Amendment Links............................................................................................................. 27
Teen Pregnancy Links ................................................................................................................ 28
Prenatal Care Link ..................................................................................................................... 29
Legal Services Link ..................................................................................................................... 30
Prison Services Link ................................................................................................................... 31
Medicaid Link ............................................................................................................................. 32
Immigrants Links........................................................................................................................ 33
Natives Link................................................................................................................................. 34
Drug Rehabilitation link ............................................................................................................ 35
Child Care.................................................................................................................................... 36
School Lunch Links .................................................................................................................... 37
Education Links .......................................................................................................................... 38
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House Deconcentrating ............................................................................................................... 39
Public Transportation Links...................................................................................................... 40
Job Training Links ..................................................................................................................... 41
Elderly Care ................................................................................................................................ 42
Link – stand alone bills ............................................................................................................... 43
Link – even small spending ........................................................................................................ 44
Deficit Spending .......................................................................................................................... 45
Perception Links ......................................................................................................................... 46
Impacts Econ
2NC Inflation Impact—Economic Collapse (Irreversible) ..................................................... 48
Econ Collapse impacts ................................................................................................................ 49
Economy Impacts – Wars .......................................................................................................... 50
Answer to (AT) common aff arguens
AT – Social Security & Medicare make it inevitable............................................................... 52
AT – Stimulus solved .................................................................................................................. 53
AT- US econ not key to global econ ........................................................................................... 54
Hegemony imapcs
2NC Inflation Impact—Chinese Economy ............................................................................... 55
2NC Inflation Impact—Food Prices.......................................................................................... 56
Dollar Hegemony Good—Trade................................................................................................ 57
Dollar key to U.S. Hegemony ..................................................................................................... 57
Dollar Hegemony Good—Soft Power ....................................................................................... 60
Soft Power good........................................................................................................................... 61
Hard power good......................................................................................................................... 62
AT- Heg impact turns ................................................................................................................. 63
DA turns case
DA turns case- Economic collapse hurts social service ........................................................... 64
econ collapse causes poverty ...................................................................................................... 65
Growth Key to solve Poverty ..................................................................................................... 66
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Aff Answers
2ac Frontline ................................................................................................................................ 67
Perception is Non Unique ........................................................................................................... 70
Spending is non unique............................................................................................................... 71
No link- spending does not = inflation ...................................................................................... 72
No Impact-no risk of One-Day Collapse ................................................................................... 73
Aff- Link Turn ext ...................................................................................................................... 75
Aff- Impact Turns – Inflation Good for the Economy (1 of 2) ............................................... 76
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Explanation
This argument is based around the idea of spending in relation to inflation. First, it is
important to remember that money is only as strong as we believe it is. Its not backed by
gold (any more), its not a given what its worth. Money is even traded by people called
currency speculators like stocks on the stock market. Just like with stocks, when people
believe the stock will perform well, the value goes up, when they think it not going to
perform well, the stock value goes down. This Argument says that basically the same thing
is happening with the American dollar. Currently, Obama is trying to seem like he is going
to cut back on spending. This is important because currency traders want Obama to cut
back his spending, otherwise the value of the dollar will become weak. This is simple supply
and demand, if the government is printing money to pay for the plan, that’s more money
floating around in the world, meaning the value will go down. This decrease in the value of
money is called inflation, as prices of everything people buy inflates because the money is
worth less. The most local example I can think of is a bag of chips; the small bag use to cost
25 cents, now its 35 cents. This is inflation in action, money being worth less means you
have to spend more to get the same effect.
The impact to this argument CAN be a traditional economy argument, but that is
not how the shell is constructed. The shell says that if the American dollar gets weaker,
then the international community will stop using the dollar, as it has for the past 60 years,
as its default currency, and they will switch to something else. This means the United States
will no longer be the world leader, causing war as other nations fight to see who becomes
top dog.
This is one of the few varieties of the spending argument that I feel is strong. It has 2
big advantages
a.
it does not rely on an economic collapse = war argument (even though you can make
that argument if you want) which I think is a big plus.
b.
The link is fundamentally a perception link. The neg does not have to win that the
plan itself would collapse the dollar, but the currency traders would give up on the dollar
like wall street traders give up on a stock. This also helps on the impact comparison with
the aff, because neg’s can argue that the time frame is immediate while the aff takes time
for to solve.
Good luck
Lawrence
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Shell
A. Uniqueness and Internal Link- The Economy is Recovering now, but this is only based
upon Obama being perceived as reigning in federal spending. An increases in spending
would crush the American dollar, crashing the economy
Martin Crutsinger, writer, 5/26/09
http://www.google.com/hostednews/ap/article/ALeqM5i943uGIOJfvJnFrpkkDvWEbD4KRAD98E682O0]
The federal government is being forced to greatly expand its sales of Treasury bills, notes and bonds to cover a
deficit that is projected to soar this year to eye-popping levels. So far all that new debt had been sold at low interest
rates as investors have preferred the safety of Treasury securities in uncertain times. But what would happen if that
changed? If China and other foreign investors suddenly stopped buying U.S. debt, the cost of borrowing for
consumers and businesses could rise and the value of the dollar could fall, raising the threat of inflation. At the
moment, chances of that outcome are remote, but analysts are worried about what might happen if Congress and the
Obama administration don't do a better job of curbing deficit spending. Here are questions and answers examining the links between the
government's borrowing needs and the economy. Q: What is happening to the government's need to borrow money to finance its operations? A: The government's
borrowing needs are ballooning, a reflection of the billions of dollars being spent to lift the economy out of a deep recession and deal with the worst financial crisis in
seven decades. The Obama administration estimates that the deficit for the current budget year, which ends on Sept. 30, will total an all-time high of $1.84 trillion.
That would be four times the size of the current record, last year's $454.8 billion deficit. As a share of the overall economy, the deficit this year would be the highest
since 1945, when the government was borrowing heavily to win World War II. Q: How are the current deficits being financed? A: The government is expanding the
amounts of Treasury securities it is selling on everything from the three-month and six-month bills it auctions on a weekly basis, to 30-year bonds. The 30-year bonds
are now being auctioned monthly, up from four times a year. Treasury securities are investments in government debt, where an investor buys government bonds, notes
and bills, and earns interest in return. Q: How are bond investors reacting? A: So far, the debt sales have gone smoothly, with interest rates remaining at historical
lows. The government's surging borrowing needs are coming at a time when investors have flocked to the safety of U.S. Treasuries in response to severe turmoil in
financial markets. The rates on three-month and six-month Treasury bills have been trading well below 1 percent so far this year, including at the most recent auction
on Tuesday. At one point last fall, when the market panic was at its height, the yield on the four-week Treasury bill dropped to a record low of zero, meaning investors
were willing to accept no return at all for loaning the government money, rather than risk losses by investing elsewhere. Q: If these rates are remaining low, why is
there concern? A: While three-month and six-month bills are heavily influenced by the Federal Reserve, which has driven a key short-term rate to a record low in an
effort to jump-start the economy, longer term rates are more influenced by market forces. Those rates have been rising recently. Rates for 10-year Treasury securities
last week rose to above 3.4 percent on Friday, the highest level since November, and headed even higher to 3.55 percent on Tuesday. Though that is still low by
historical standards. A year ago, the 10-year note was above 4 percent. The 10-year Treasury is the benchmark rate for many mortgage loans. The worry is that rising
rates in this area could drive mortgage rates higher and also increase the cost of borrowing for businesses. That could short-circuit the nation's efforts to emerge from a
Q: How likely is such an outcome? A: Many economists believe that the
Federal Reserve, which is already spending billions of dollars to drive mortgage rates lower and assist in a housing
recovery, will simply step up its purchases of mortgage-backed securities — investments that are linked to the value
of mortgages. However, there are other factors at play as well which could overwhelm the Fed's efforts. Q: What are
those factors? A: Foreign investors hold a major chunk of the federal government's debt — close to half of the
roughly $7 trillion that is held by the public. The rest of the $11.3 trillion total national debt is held in government
trust funds such as the Social Security trust fund. China last September surpassed Japan as the largest foreign holder
of Treasury securities. The worry is that at some point China and other foreign investors might decide they want to
hold less in Treasury securities, a switch that would mean falling demand at Treasury debt auctions and rising
interest rates. It would also mean a weaker dollar if foreigners switch out of their dollar-denominated investments
into investments in other currencies. That could send the value of the dollar plunging at the same time U.S. interest
rates are rising. That could spark higher inflation because a weaker dollar would mean it would cost American
consumers more to buy products made overseas. Q: Would rising interest rates slow and possibly derail any
recovery? A: Yes. And there's a concern that a plunging dollar, by making inflation worse, would tie the Fed's hands
in responding to the problem. (The Fed often lowers interest rates to encourage economic growth, but that can also
worsen inflation.) That could leave the country in a fix — caught between weak economic growth and rising
inflation, a situation that was dubbed "stagflation" when it last occurred in the United States during the oil price
shocks of the 1970s. Q: How big a threat is the risk of rising interest rates and a falling dollar stemming from the government's huge financing needs? A:
deep recession and the worst housing crisis in decades.
Economists believe that the risk is low, at least in the short term, because the economy is so weak. The weak economy means that businesses do not have as great a
need to borrow from the same investment pool as the federal government. But problems could arise when the economy starts growing and business borrowing picks
Q: Is that
inevitable? A: No. Economists believe that investors — both foreign and domestic — will continue to buy
government and corporate debt as long as the government develops what they view as a credible plan to get control
of the federal budget deficit once the current economic and financial crises have passed. The Obama administration,
mindful of the need to convince investors that the soaring deficits are a short-run problem, has been stressing that
the president is intent on cutting the deficit in half by the end of his first term.
up. The federal government's huge borrowing needs could leave less for private companies to borrow and that could slow economic growth.
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B. Plan spends money
(insert card from other parts of the file or analysis here)
C. Impacts- Inflation kills dollar primacy Pritchard 6/2/09
[Pritchard is the senior member of the Rohrer College of Business faculty, “Inflation and Dollar Depreciation,”
http://newsblaze.com/story/2009060219390700001.wi/topstory.html] The decreasing
value of the dollar has resulted in
China calling for another currency to replace the dollar as the major reserve currency. (A reserve currency is a stable
currency that is used for a significant portion of international trade.) Although this is unlikely to take place, countries could well decide
to replace the dollar with a basket of currencies. Such a move would reduce the demand for the
dollar, resulting in its further depreciation. The actual increases in longer-term interest rates result primarily from the fact that
bond purchasers - who take a long-term view of the economy - want to obtain a real (inflation-adjusted) return on their investments. Consequently,
whenever they expect inflation to increase, they require higher interest rates to compensate them for
the anticipated losses in purchasing power that will result from the impending inflation. This fear of
inflation drives longer-term interest rates upward. Similarly, anticipated inflation has a negative
impact on stock prices. When stock market investors foresee inflation, they too want higher total
returns. This results in dampening of stock prices. This dampening is harmful for two primary
reasons. First, people spend less when they have less wealth. Lower stock prices (as well as low real estate prices) result in
decreased consumer spending and prolong the recession. Higher stock prices stimulate spending and economic growth.
Second, at present, many retirees and would-be retirees have seen 40-percent decreases in their 401(k) plans. Many retirees have been forced to return
to work; many would-be's have been forced to postpone retirement. This has led to personal hardship for many, contributed to the increased
unemployment, will lead to higher long-term unemployment and will postpone economic recovery. Baby Boomers, especially, are frightened about
their futures; many are reluctant to spend.
Dollar primacy is key to hegemony
Looney 3 [Robert, November 2003. Professor of National Security Affairs at the Naval Postgraduate School. “From Petrodollars to Petroeuros:
Are the Dollar's Days as an International Reserve Currency Drawing to an End?” Strategic Insights, 2.11,
http://www.ccc.nps.navy.mil/si/nov03/middleEast.asp.]
Political power and prestige. The benefits of "power and prestige" are nebulous. Nevertheless, the loss of key currency status and the loss
of international creditor status have sometimes been associated, along with such non-economic factors as the loss of colonies and
military power, in discussions of the historical decline of great powers. Causality may well flow from key currency status to power and
prestige and in the opposite direction as well.[8] On a broader scale, Niall Ferguson[9] notes that one pillar of American dominance can
be found in the way successive U.S. government sought to take advantage of the dollar's role as a key currency. Quoting
several noted authorities, he notes that [the role of the dollar] enabled the United States to be "far less restrained…than all other states by normal
fiscal and foreign exchange constraints when it came to funding whatever foreign or strategic policies it decided to implement." As Robert Gilpin
notes, quoting Charles de Gaulle, such policies led to a 'hegemony of the dollar" that gave the U.S. "extravagant privileges." In David Calleo's words,
the U.S. government had access to a "gold mine of paper" and could therefore collect a subsidy form foreigners in the form of seignorage (the profits
that flow to those who mint or print a depreciating currency). The web contains many more radical interactions of the dollar's role. Usually something
along the following lines: World trade is now a game in which the U.S. produces dollars and the rest of the world produces
things that dollars can buy. The world's interlinked economies no longer trade to capture a comparative advantage; they compete in exports to
capture needed dollars to service dollar-denominated foreign debts and to accumulate dollar reserves to sustain the exchange value of their domestic
currencies…. This phenomenon is known as dollar hegemony, which is created by the geopolitically constructed peculiarity that critical commodities,
most notably oil, are denominated in dollars. Everyone accepts dollars because dollars can buy oil. The recycling of petro-dollars is the price the U.S.
has extracted from oil-producing countries for U.S. tolerance of the oil-exporting cartel since 1973.[10] America's coercive power in the
world is based as much on the dollar's status as the global reserve currency as on U.S. military muscle. Everyone
needs oil, and to pay for it, they must have dollars. To secure dollars, they must sell their goods to the U.S., under terms acceptable to the people who
rule America. The dollar is way overpriced, but it's the only world currency. Under the current dollars-only arrangement, U.S. money is in effect
backed by the oil reserves of every other nation.[ 11] While it is tempting to dismiss passages of this sort as uninformed rants, they do
contain some elements of truth. There are tangible benefits that accrue to the country whose currency is a reserve currency. The real question is: if this
situation is so intolerable and unfair, why hasn't the world ganged up on the United States and changed the system? Why haven't countries like Libya
and Iran required something like euros or gold dinars in payment for oil? After all, with the collapse of the Bretton Woods system in 1971 the
International Monitary Fund's Standard Drawing Rights (unit of account) was certainly an available alternative to the dollar.[12]
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Finally, U.S. leadership is key to preventing multiple scenarios for war
Thayer 06 [Bradley A., Professor of Defense and Strategic Studies @ Missouri State University, “In Defense of Primacy.,” National Interest;
Nov/Dec2006 Issue 86, p32-37]
THROUGHOUT HISTORY, peace and stability have been great benefits of an era where there was a dominant power -Rome, Britain or the United States today. Scholars and statesmen have long recognized the irenic effect of power on the anarchic world
of international politics. Everything we think of when we consider the current international order--free trade, a robust
monetary regime, increasing respect for human rights, growing democratization--is directly linked to U.S. power.
Retrenchment proponents seem to think that the current system can be maintained without the current amount of U.S. power behind it. In that they are dead wrong and need to be reminded of one of
Appalling things happen when international orders collapse. The Dark Ages followed Rome's
collapse. Hitler succeeded the order established at Versailles. Without U.S. power, the liberal order created by the
United States will end just as assuredly. As country and western great Ral Donner sang: "You don't know what you've got (until you lose it)." Consequently, it is important
to note what those good things are. In addition to ensuring the security of the United States and its allies, American primacy within the international system causes many
positive outcomes for Washington and the world. The first has been a more peaceful world. During the Cold War, U.S. leadership reduced friction among many states that were
historical antagonists, most notably France and West Germany. Today, American primacy helps keep a number of complicated relationships aligned-between Greece and Turkey, Israel and Egypt, South Korea and Japan, India and Pakistan, Indonesia and Australia. This is
not to say it fulfills Woodrow Wilson's vision of ending all war. Wars still occur where Washington's interests are not seriously threatened, such as in Darfur, but a Pax Americana does
reduce war's likelihood, particularly war's worst form: great power wars. Second, American power gives the United States
the ability to spread democracy and other elements of its ideology of liberalism: Doing so is a source of much good for the countries concerned as well as the United States
history's most significant lessons:
because, as John Owen noted on these pages in the Spring 2006 issue, liberal democracies are more likely to align with the United States and be sympathetic to the American worldview.( n3) So,
once states are governed democratically, the likelihood of any type of conflict is
significantly reduced. This is not because democracies do not have clashing interests. Indeed they do. Rather, it is because they are more open, more
transparent and more likely to want to resolve things amicably in concurrence with U.S. leadership. And so, in general, democratic states are good for their
spreading democracy helps maintain U.S. primacy. In addition,
citizens as well as for advancing the interests of the United States.
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2NC – Uniqueness Wall
The US Economy is on the rise but is still very vital and sensitive to change.
Sapna Maheshwari June 29, 2009
Sapna Maheshwari, A Head Bloomberg Press Reporter, June 29, 2009, Geithner Says U.S. Economy Shows
‘Greater Signs of Stability’, Treasury Secretary Timothy Geither and Bloomberg Press,
http://www.bloomberg.com/apps/news?pid=20601068&sid=aB1YsKSnfGb0, Accessed June 30, 2009
U.S. economy shows signs of emerging from its slump
and financial markets are starting to stabilize. “The national economy is showing some greater
signs of stability” as consumer confidence and credit conditions improve, Geithner said today at a communitydevelopment event in New York. Still, the U.S. faces “extremely challenging times” and “we have a lot to
Treasury Secretary Timothy Geithner said the
do to lay the foundation for financial stability,” he said. Geithner attributed the signs of improvement in part on a
$787 billion stimulus plan signed earlier this year by President Barack Obama. The federal government may
need to do more to ensure the economy rebounds from the recession, Geithner said.
Inflation is extremely low.
Moody 6/7/09
Richard Moody, chief economist at Forward Capital, June 17, 2009, Inflation drops 1.3% in year; most in six
decades, consumer prices rise 0.1%, US Inflation Calculator, http://www.usinflationcalculator.com/inflationrates/inflation-drops-13-in-year-most-in-six-decades-consumer-prices-rise-01/1000508/, accessed 7/1/09
Consumer prices crawled weakly higher in May and for the first time in three months while inflation plunged
1.3% in the past year to mark the largest decline since April 1950, the government reported
Wednesday. The Labor Department said the Consumer Price Index, which measures inflation pressures
at the consumer level, inched 0.1% higher in May following a flat reading in April. The increase
was less than generally expected, but many analyst are expecting more of the same tame readings in coming months.
Inflation is good now but if it rises investments will quickly erode.
Aversa, June 25, 2009
Jeannine Aversa, Associated press of the Boston Globe, June 25, 2009 Thursday, Fed stands firm on interest
rate, The Boston Globe,
The mention of higher prices hit the Treasury market because the value of returns on fixed-income
investments can erode quickly if inflation occurs. The yield on the benchmark 10-year Treasury note,
which moves opposite its price, rose to 3.69 percent from 3.63 percent on Tuesday. Stocks also fell after the Fed's
announcement. Still, the Fed said inflation will remain ``subdued for some time.'' And overall, Fed
policy makers delivered a slightly more encouraging assessment of the economy.
Inflation is a real concern.
Bassanese 6/30/09
David Bassanese, Associated Press, June 30, 2009 Tuesday, Fed gives the right word on inflation, ABIX NEWS
SUMMARIES,
The US Federal Reserve has taken action in a bid to counter inflationary pressures. However, while inflation is
emerging as the main concern for many investors in the US, deflation may ultimately prove to be a
bigger concern. Nevertheless, the Federal Reserve itself has downplayed the prospect of deflation in its latest
monetary policy statement.
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2nc link wall
1. The plan creates a new set of priorities to fund – that is a complete flip-flop from
Obama’s promise to start dealing with the growing deficit. Even if other things are more
expensive – it’s the commitment to new unplanned expenditures that risks a massive selloff of assets by our investors.
2. Social Services always snowball – once one is passed others come along
HAULK & GAMRAT 07 PhD, President & Senior Research Associate - Allegheny
Institute for Public Policy
[Jake & Frank, July 6, 2007, POLICY BRIEF, http://www.alleghenyinstitute.org/briefs/vol7no35.pdf]
The Governor and Budget Secretary warn advocates of spending caps that they “must be prepared to explain how they propose to restrain growth
in the very limited number of programs with high rates of spending. They then postulate worse case scenarios showing how people will be
harmed by drastic cuts to social service programs. The problem with this argument is that rapid growth in social services spending
inevitably begets demand for more spending. Besides, no one is seriously recommending cutting social services
spending drastically or otherwise. However, there is a clear and overwhelming need to slow their rate of increase . It’s an
old rhetorical trick:
Claim that advocates of slower growth are calling for drastic cuts when that is obviously not the case. In any event, if health and social services
spending increases are deemed of overriding importance by the Governor and the Legislature, a spending cap would simply mean having to
decide which budget items rank lower on the funding list and cut those.
3. Social services cause inflation
Philip Harvey, Associate Professor of Law and Economics, 20 02, Human Rights and Economic Policy
Discourse: Taking Economic and Social Rights Seriously, Columbia Human Rights Law Review,
https://www.lexisnexis.com/ us/lnacademic/search/journalssubmitForm.do
As noted above, there are mitigating factors that can reduce the severity of the harms that unemployed workers and
their dependents suffer. Some of these factors work mainly by equalizing the burdens of joblessness. These include
enforcement of anti-discrimination legislation, the redirection of private or public investment to
economically depressed communities, the provision of increased educational and training
opportunities for disadvantaged population groups, and the provision of social services such as
child care that make it easier for unemployed workers to seek and find employment . To the extent
these measures are effective, they tend to reduce inequities in the distribution of the unemployment burden among
individuals and population groups.
The distribution of the costs of policies designed to secure the right to work raises fewer fairness concerns. There are
two reasons for this. First, the burdens likely to flow from efforts to secure the right to work - increased inflation,
higher taxes, and bigger [*436] government - may impinge on the utilitarian interests of those who bear them, but
they do not violate their human rights. There is no right to price stability or lower taxes recognized in either
international or domestic human rights law, and while some governmental actions may violate rights, the growth of
government per se does not violate any recognized human right. This does not mean that fairness concerns are
unimportant in deciding how the costs of securing the right to work should be distributed. The distribution of tax
burdens always raises fairness issues, as does the distribution of the costs of inflation. But these fairness concerns
are not heightened by an additional overlay of human rights considerations.
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4. It is about perception – the news cycle controls investment decisions
JOHNSON 5 – 25 – 09 Economic Analyst for Reuters
[Steven C., http://www.reuters.com/article/reutersEdge/idUSTRE54O48M20090525?sp=true]
Some analysts say the dollar will rebound later this year as U.S. policies start to help the economy
recover, allowing the Federal Reserve to raise interest rates before other central banks and increasing the
dollar's allure. Indeed, if the euro and yen get much stronger, Marta said, Germany and Japan may
increase Treasury purchases, which "would have a salutary effect." But for now, the bears are in
control, with all the major market themes translating into dollar weakness. "If the news stream is
good, we are told investors are less risk averse and do not need the dollar's security," said Brown
Brothers Harriman currency strategist Marc Chandler. "If the news stream is poor, we are told the U.S. is
in horrific shape and the budget deficit will swell even more. It is difficult to see what will
break this psychology in the coming weeks."
5. They can’t link turn perception. Markets are determined by political moves. The plan’s
perception is more important than economic reality. Look at this evidence from currency
traders which displays exactly how jumpy they are
Ruggiero, Murray A- June 1 2009- Publication: Futures- Trading through gold-colored glasses- Onlinehttp://www.allbusiness.com/economy-economic-indicators/money-currencies-interest/12354563-1.html
Markets are determined by political moves and decisions and not the primary market
forces; the demand and supply that result suggest that market advice is no more reliable. Politics
play a big part in market-driving questions. Which countries will cut interest rates and by how much?
Which country will subsidize their corporations and banks and by how much? Which country will get loans from the
IMF and World Bank - or unlimited currency swap lines? Which company will be bailed out? Which central banks will sell off gold to
keep the price low? When will the world stop lending money to the United States that can
never be repaid? These are political questions, not economic ones, and they only can be answered by political
decision makers, not the forces of supply and demand. WHERE DO WE GO FROH HERE? Even though we can get a better view of
the world currency markets by looking at these currencies in terms of gold, it's not a perfect view. We would need to extend this
perspective to other areas of the economy. For example, we could examine currencies relative to 1% of the CRB index, or another
measure of raw material prices. A basket of commodities is harder to manipulate than gold or silver. Other options are industrial and
base metals, such as platinum, copper or nickel. These all would present different views of the interaction of the world currencies and
lead to a greater understanding of these interactions. In today's world, a trader cannot trade currencies without understanding the effects
of government intervention and the role of the Federal Reserve and other world banking organizations when it comes to the effect of
world monetary policy on the world economy as a whole. We are at economic crossroads. The world is in a
global recession and increasing the world currency supplies will undoubtedly have a lasting effect on
the world economy. Indeed, longterm damage, or at least a fundamental economic shift, will follow.
Not just currency traders, but all of us, need to be nimble, active and creative about how we perceive
the world financial landscape going forward.
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Finally, There is 0 risk of a link turn- Spending is bad for the economy – it can’t help
RIEDLE 08 Grover Hermann Fellow in Federal Budgetary Affairs in Thomas A. Roe Institute for Economic
Policy Studies @ Heritage Foundation
(Brian, , Backgrounder #2208, “Why Government Spending Does Not Stimulate Economic Growth”, 11-12,
http://www.heritage.org/research/budget/bg2208.cfm)
In a throwback to the 1930s and 1970s, Demo-cratic lawmakers are betting that America's economic ills can be cured by an extraordinary expansion of government. This tired approach has
already failed repeatedly in the past year, in which Congress and the President: 1. Increased total federal spending by 11 percent to nearly $3 trillion; 2. Enacted $333 billion in "emergency"
spending; 3. Enacted $105 billion in tax rebates; and 4. Pushed the budget deficit to $455 billion in the name of "stimulus." Every one of these policies failed to increase eco-nomic growth.
Now, in addition to passing a $700 bil-lion financial sector rescue package, lawmakers have decided to double down on these failed spending pol-icies by proposing a $300 billion economic
Even though the last $455 billion in Keynesian deficit spending failed to help the economy,
lawmak-ers seem to have convinced themselves that the next $300 billion will succeed. This is not the first time government
expansions have failed to produce economic growth. Massive spending hikes in the 1930s, 1960s, and 1970s all failed to increase economic growth rates. Yet in the
1980s and 1990s—when the federal government shrank by one-fifth as a percentage of gross domestic product
(GDP)—the U.S. economy enjoyed its great-est expansion to date. Cross-national comparisons yield the same
result. The U.S. government spends significantly less than the 15 pre-2004 European Union nations, and yet enjoys 40 percent larger per
capita GDP, 50 percent faster economic growth rates, and a sub-stantially lower unemployment rate.[1] When
conventional economic wisdom repeat-edly fails, it becomes necessary to revisit that con-ventional wisdom. Government spending fails to stimulate economic growth because every
dollar Congress "injects" into the economy must first be taxed or borrowed out of the economy. Thus,
gov-ernment spending "stimulus" merely redistributes existing income, doing nothing to increase
produc-tivity or employment, and therefore nothing to cre-ate additional income. Even worse, many federal expenditures weaken the private sector by directing resources
stimulus bill.
toward less productive uses and thus impede income growth. The Myth of Spending as "Stimulus" Spending-stimulus advocates claim that govern-ment can "inject" new money into the
economy, increasing demand and therefore production. This raises the obvious question: Where does the gov-ernment acquire the money it pumps into the econ-omy? Congress does not have a
vault of money waiting to be distributed: Therefore, every dollar Congress "injects" into the economy must first be taxed or borrowed out of the economy. No new spending power is created. It is
merely redistrib-uted from one group of people to another.[2] Spending-stimulus advocates typically respond that redistributing money from "savers" to "spend-ers" will lead to additional
spending. That assumes that savers store their savings in their mattresses or elsewhere outside the economy. In reality, nearly all Americans either invest their savings by purchasing financial
assets such as stocks and bonds (which finances business investment), or by purchasing non-financial assets such as real estate and collecti-bles, or they deposit it in banks (which quickly lend it
If Congress funds new
spend-ing with taxes, it is simply redistributing existing income. If Congress instead borrows the money from domestic
investors, those investors will have that much less to invest or to spend in the private economy. If Congress borrows the money from
to others to spend). The money is used regardless of whether people spend or save. Government cannot create new purchasing power out of thin air.
foreigners, the balance of payments will adjust by equally reducing net exports, leaving GDP unchanged. Every dollar Congress spends must first come from somewhere else. This does not
mean that government spending has no economic impact at all. Government spending often alters the composition of total demand, such as increasing consumption at the expense of investment.
More importantly, government spending can alter future economic growth. Economic growth results from producing more goods and services (not from redistributing existing income), and that
requires productivity growth and growth in the labor supply. A government's impact on economic growth is, therefore, determined by its policies' effect on labor productivity and labor supply.
Productivity growth requires increasing the amount of capital, either material or human, relative to the amount of labor employed. Productivity growth is facilitated by smoothly functioning
mar-kets indicating accurate price signals to which buy-ers and sellers, firms and workers can respond in flexible markets. Only in the rare instances where the private sector fails to provide these
inputs in ade-quate amounts is government spending necessary. For instance, government spending on education, job training, physical infrastructure, and research and development can increase
long-term productiv-ity rates—but only if government spending does not crowd out similar private spending, and only if gov-ernment spends the money more competently than businesses,
nonprofit organizations, and private cit-izens. More specifically, government must secure a higher long-term return on its investment than tax-payers' (or investors lending the government)
requirements with the same funds. Historically, gov-ernments have rarely outperformed the private sec-tor in generating productivity growth. Even when government spending improves
eco-nomic growth rates on balance, it is necessary to dif-ferentiate between immediate versus future effects. There is no immediate stimulus from government spending, since that money had to
be removed from another part of the economy. However, a productiv-ity investment may aid future economic growth, once it has been fully completed and is being used by the American
workforce. For example, spending on energy itself does not improve economic growth, yet the eventual existence of a completed, well-functioning energy system can. Those economic impacts
Most government spending has historically reduced productivity and long-term economic growth due to: [3]
1. Taxes. Most government spending is financed by taxes, and high tax rates reduce incentives to work, save, and invest —resulting in a less
can take years, or even decades, to occur.
motivated workforce as well as less business investment in new capital and technology. Few government expenditures raise productivity enough to offset the productivity lost due to taxes;
2.
Incentives. Social spending often reduces in-centives for productivity by subsidizing leisure and unemployment. Combined with taxes, it is clear that
taxing Peter to subsidize Paul reduces both of their incentives to be productive, since productivity no longer determines one's income; 3. Displacement. Every dollar spent by
politicians means one dollar less to be allocated based on market forces within the more productive pri-vate sector. For example, rather than allowing the
market to allocate investments, politicians seize that money and earmark it for favored organizations with little regard for improve-ments to economic efficiency; and
4.
Inefficiencies. Government provision of housing, education, and postal operations are often much less efficient than the private sector. Government also distorts existing health care
and education markets by promoting third-party payers, resulting in over-consumption and insensitivity to prices and outcomes. Another example of inefficiency is when politicians earmark
highway money for wasteful pork projects rather than expanding highway capacity where it is most needed.
gov-ernment expansions reduce economic growth:[4]
Mountains of academic studies show how
1. Public Finance Review reported that "higher total government expenditure, no matter how
financed, is associated with a lower growth rate of real per capita gross state product."[5]
2. The Quarterly Journal of Economics reported that "the ratio of real government consumption
expenditure to real GDP had a negative associa-tion with growth and investment," and "growth is inversely related to the share of government consumption in GDP, but insignificantly related to
the share of public investment."[6]
3. A Journal of Macroeconomics study discovered that "the coefficient of the additive terms of the government-size variable
indicates that a 1% increase in government size decreases the rate of economic growth by 0.143%."[7]
4. Public Choice reported that "a one percent in-crease in government spending as a
percent of GDP (from, say, 30 to 31%) would raise the un-employment rate by approximately .36 of one percent (from, say, 8 to 8.36 percent)."[8] Economic growth is driven by individuals and
entrepreneurs operating in free markets, not by Washington spending and regulations. The out-dated idea that transferring spending power from the private sector to Washington will expand the
economy has been thoroughly discredited, yet lawmakers continue to return to this strategy. The U.S. economy has soared highest when the federal government was shrinking, and it has
stagnated at times of government expansion. This experience has been paralleled in Europe, where government expansions have been followed by economic decline. A strong private sector
provides the nation with strong economic growth and benefits for all Americans. Three Applications of the Spending Fallacy The myth of government spending stimulus is often found in
debates over tax rebates (which func-tion similar to government spending), highway spending, and federal bailouts of states. 1) Why Tax Rebates Do Not Stimulate The debate on taxes and
economic growth is also clouded with confusion. By asserting that tax cuts spur economic growth by "putting spending money in people's pockets," many tax cutters commit the same fallacy as
do government spenders. Similar to government spending, the money for tax cuts does not fall from the sky. It comes out of investment and net exports if financed by budget deficits or
govern-ment spending if offset by spending cuts. However, the right tax cuts can add substantially to productivity. As stated above, economic growth requires that businesses produce increasing
amounts of goods and services, and that requires consistent business investment and a growing, pro-ductive workforce. Yet high marginal tax rates— defined as the tax on the next dollar
earned—create a disincentive to engage in those activities. Reduc-ing marginal tax rates on businesses and workers will increase incentives to work, save, and invest. These incentives encourage
more business invest-ment, a more productive workforce by raising the after-tax returns to education, and more work effort, all of which add to the economy's long-term capac-ity for growth.
Thus, not all tax cuts are created equal. The economic impact of a tax cut is measured by the extent to which it alters behavior to encourage productivity. Tax rebates fail to increase economic
growth because they are not associated with productivity or work effort. No new income is created because no one is required work, save, or invest more to receive a rebate. In that sense, rebates
are economically indistinguishable from government spending pro-grams that write each American a check. In fact, the federal government treats rebate checks as a "social benefit payment to
persons."[9] They represent another feeble attempt to create new purchasing power out of thin air. Consider the 2001 tax rebates. Washington bor-rowed billions from the capital markets, and
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then mailed it to Americans in the form of $600 checks. Rather than encourage income creation, Congress merely transferred existing income from investors to consumers. Predictably, the
following quarter saw consumer spending growth surge from 1.4 percent to 7.0 percent, and gross private domestic investment spending drop correspondingly by 22.7 percent[10] The overall
economy grew at a meager 1.6 percent that quarter, and remained stagnant through 2001 and much of 2002. It was not until the 2003 tax cuts—which cut tax rates for workers and investors—
that the econ-omy finally and immediately began a robust recov-ery. In the previous 18 months, business investment had plummeted, the stock market had dropped 18 percent, and the economy
had lost 616,000 jobs. In the 18 months following the 2003 tax rate reductions, business investment surged, the stock market leaped 32 percent, and Americans created 307,000 new jobs
(followed by 5 million jobs in the next seven quarters).[11] Overall eco-nomic growth rates doubled.[12] Marginal tax rates were reduced throughout the 1920s, 1960s, and 1980s. In all three
decades, investment increased, and higher economic growth followed. Real GDP increased by 59 percent from 1921 to 1929, by 42 percent from 1961 to 1968, and by 31 percent from 1982 to
1989.[13] Yet in a triumph of hope over experience, law-makers embraced tax rebates over rate reductions again in early 2008. While the economic data are still coming in, it is clear that once
again the rebates failed to support economic growth. There is no reason to expect another round of tax rebates to be any more effective.[14] 2) Highway Spending: The Myth of the 47,576 New
Nowhere is the government spending stimu-lus myth more widespread than in highway spending
Jobs
. Congress
is already rumbling to push billions in highway spending in the next stimulus package. Over the years, lawmakers have repeat-edly supported their errant claim that highway spending is an
immediate economic tonic by cit-ing a Department of Transportation (DOT) study. This study supposedly states that every $1 bil-lion spent on highways adds 47,576 new jobs to the
spending $1 billion on high-ways would require 47,576
workers (or more pre-cisely, it would require 26,524 workers, who then spend their income elsewhere, supporting an addi-tional 21,052 workers). But before the
government can spend $1 billion hiring road builders and pur-chasing asphalt, it must first tax or borrow
$1 bil-lion from other sectors of the economy—which would then lose a similar number of jobs. In other words,
economy.[15] The problem: The DOT study made no such claim. It stated that
highway spending merely transfers jobs and income from one part of the economy to another. As The Heritage Foundation's Ronald Utt has explained, "The only way that $1 billion of new
highway spending can create 47,576 new jobs is if the $1 billion appears out of nowhere as if it were manna from heaven."[16] The DOT report implicitly acknowledged this point by referring
to the trans-portation jobs as "employment benefits" within the transportation sector, rather than as new jobs for the total economy. An April 2008 DOT update to its previous study reduced the
employment figure to 34,779 jobs supported by each $1 billion spent on highways, and explicitly stated that the figure "refers to jobs supported by highway investments, not jobs cre-ated."[17]
Similarly, a Congressional Research Service study calculated similar numbers as the DOT study, but cautioned:
To the extent that financing new highways by reducing expenditures on other
programs or by deficit finance and its impact on private consumption and investment, the net impact on the economy of highway construction in terms of both output and employment could be
nullified or even negative.[18] Not surprisingly, highway spending has a poor track record of stimulating the economy. The Emer-gency Jobs Appropriations Act of 1983 appropri-ated billions
of dollars in highway spending (among other programs) in hopes of pushing the double-digit unemployment rate downward. Years later, an audit by the General Accounting Office (GAO, now
the Government Accountability Office) found that highway spending generally failed to create a signif-icant number of new jobs.[19] The bottom line is that there is no reason to expect
additional highway spending this year to boost short-term economic growth or create new jobs. As stated above, resulting improvements in the nation's infrastructure may increase future
produc-tivity and growth—once they are completed and in use. This is not the same as suggesting that the act of spending money on additional highway workers and asphalt is itself an immediate
stimulant. Even the hope of future productivity increases rest on the assumptions that politicians will allocate money to necessary highway projects (rather then pork), and that those future
State Bailouts Merely Shift Money Around
Congress is reportedly considering using stimu-lus funding to bail out states dealing with their own budget shortfalls. This makes little sense as a matter of macroeconomic policy. State
spending does not suddenly become stimulative because it is funded by Washington instead of state
governments. Either way, any spending "injected" into the economy must first be taxed or borrowed from
the economy. It does not matter which level of government is doing the taxing, borrowing, or spending. Furthermore, sending federal aid to states would not save taxpayers a dime
productivity benefits will outweigh the lost productivity from raising future tax rates to finance the project.[20] 3)
because state taxpayers are also federal taxpayers. Increasing federal bor-rowing to keep state taxes from rising is like run-ning up a Visa card balance to keep the Mastercard balance from rising.
The overall costs do not change, only the address receiving the payment. Governors typically respond that a federal bail-out is preferable because it could be funded with deficits rather than new
taxes—currently not an option for the 49 states with balanced-budget requirements. But nobody forced these states to enact balanced-budget requirements, which they are free to repeal. It is
disingenuous for a state to enact a balanced-budget amendment, and then demand that Washington bail it out of the conse-quences of its own policy. Congress already sends $467 billion to state
and local government every year—up 29 percent after inflation since 2000.[21] This is well beyond what is needed to reimburse states for federal man-dates. In fact, since 1996, Washington has
imposed less than $25 million per state in new unfunded mandates. (No Child Left Behind is neither un-funded nor mandated.)[22] State health, education, and transportation programs remain
heavily subsi-dized by Washington. Because states are so dependent on income tax revenues—which are volatile—common sense says to build rainy-day funds during booms to cushion the
inevitable recessions. Instead, states keep responding to temporary revenue surges with new permanent spending programs. Between 1994 and 2001, states flush with new revenues shunned
rainy-day funds and instead expanded their general fund budgets by 6.2 percent annually.[23] All booms eventually end, and these free-spend-ing states left themselves utterly unprepared for
the 2002–2003 economic slowdown. Yet instead of suf-ficiently paring back their bloated budgets, the states demanded and received a $30 billion bailout from Washington in 2003. When
government bails out irresponsible behavior, it only encourages more irresponsibility. And that is just what happened: After the 2003 bailout, states went right back to spending—with annual
budget hikes averaging 7.2 percent over the next four years.[24] Rainy-day funds were expanded, although not nearly by enough. Thus, another recession has brought another round of state
How will states learn to budget responsibly if they know they can keep returning to the federal
ATM? The biggest losers from a federal bailout are the taxpayers who live in fiscally responsible states. They played by the rules and resisted extravagant new spending programs—and will
bailout calls.
be "rewarded" with higher taxes to bail out neighboring states that went on a spending spree they could not afford.That is simply unfair. And it encourages responsible states to be less responsible
Congress should resist a bailout and instead instruct state
governments to set priorities, make trade-offs, and reduce unnecessary spending. States that insist on deficit spending should reform their own balanced-budget laws rather
next time—better to be the bailout recipient than the bailout payer.
than demand that Washington borrow for them. Finally, any fed-eral aid to state governments should come in the form of loans to be repaid in full, with interest, within three years. A Better Way
Government spending has an abysmal track record of stimulating the economy. However, these repeated failures have not
stopped lawmak-ers from proposing and enacting a seemingly end-less string of "stimulus" bills. Rather than redistributing money, lawmakers should focus on improving long-term productivity.
This means reducing marginal tax rates to encourage working, saving, and investing. It also means promoting free trade, cutting unnecessary red tape, and streamlining wasteful spending that all
weaken the private sector's ability to generate income and create wealth. Finally, it means strengthening edu-cation—not just throwing money at it. Addressing long-term growth and productivity
is more chal-lenging than waving the magic wand of short-term "stimulus" spending—but a more productive economy will be better prepared to handle future economic downturns.
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2NC Dollar brink
Speculation on the dollar is weak now, but a major event could bring the speculators back
in to dump the dollar, crushing the dollar
JOHNSON 5 – 25 – 09 Economic Analyst for Reuters
[Steven C., http://www.reuters.com/article/reutersEdge/idUSTRE54O48M20090525?sp=true]
It was an awful week for the dollar, which sank to its lowest level of the year last week, and with
markets now focused on a trillion-dollar-plus U.S. deficit, the greenback's sharp slide is not over yet. Unlike
in the recent past, when investors terrified of a global financial meltdown sought safety in Treasury bills
and other dollar assets, the greenback is now being driven by its own fundamentals, and all
of them look fairly bleak. Massive spending and unorthodox monetary policies over the last year have the
United States looking down the barrel of a $1.75 trillion deficit. That reality took on a new relevance last
week when Standard & Poor's said it may cut Britain's AAA credit rating because of soaring public debt,
prompting fears that the United States could be next. Persistently sluggish U.S. growth and rising
unemployment also suggest interest rates may be at zero for some time yet. That has started to frighten
foreign investors away from U.S. assets altogether: U.S. Treasury yields spiked to six-month highs this
week and the dollar has lost some 10 percent against a basket of currencies since March .DXY. "The charts
suggest the dollar is oversold, but people are starting to ask existential questions about the United
States," said T.J. Marta, founder and chief strategist at Marta on the Markets in Scotch Plains, New Jersey.
"The fear is about how much the government can do -- it's underwriting the banking system, the insurance
industry, the auto sector. At some point, people say, 'Oh my God, is the whole thing going to
implode?'" The government has said it will need to borrow $2 trillion, or 14 percent of the country's total
economic output, in 2009 alone. It has already spent most of a $700 billion rescue plan to prop up the
banking system and juiced up the economy with a $787 billion fiscal stimulus plan. The Federal Reserve,
meanwhile, is committed to buying $1.5 trillion in mortgage and agency debt issued by Fannie Mae and
Freddie Mac and is making direct purchases of U.S. Treasury bonds to the tune of $300 billion. And it won't
get any easier. The dollar could face more selling if Treasury struggles to attract many takers for $101 billion
of fresh government debt this week. After that, Treasury Secretary Timothy Geithner heads to China, the
biggest buyer of U.S. government debt, where he will have to reassure his hosts that the United States will be
able to ensure the value of the dollar even as its deficits balloon. It all adds up to more gray skies for the
dollar, with near-term rallies seen as excuses for renewed selling that could send the euro, which broke
$1.40 last week for the first time since January, toward $1.45 and sterling toward $1.60. "There are
half a dozen reasons to sell the dollar. Until we get an event to alter the course of
events, traders will stay on the bandwagon," said Brian Dolan, chief strategist at Forex.com in
Bedminster, New Jersey.
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Uniqueness- econ strong now
Uniqueness and Brink- The best minds on economics believe recover is the economy will
grow for the foreseeable future, but the recover is very fragile
Washington Post- July 11, 2009- Geithner: Growth Ahead, But Big Risks, Toohttp://voices.washingtonpost.com/economywatch/2009/07/geithner_growth_ahead_but_big.html?hpid=moreheadlines
Treasury Secretary Tim Geithner said in London today that he expects the world's major economies
will start growing again in coming quarters, but "there are still significant risks and challenges
ahead," he said, Reuters reports. "We have a very powerful set of policies in place, coming on stream. I
think there is a very good chance we will see the U.S. economy and the world economy get back to
recovery, get growing again, over the next few quarters," Geithner said.
China rebound is fueling an uptick in the global economy
Bloomberg News- July 16, 2009 - China’s Rebound Carries U.S., Other Economies Toward RecoveryChina’s economic comeback is under way, towing along companies from Intel Corp. to Hyundai Motor
Co. and starting to make up for weak demand in other major economies. The world’s
third-largest economy grew 7.9 percent in the second quarter from a year earlier after expanding at the
slowest pace in almost a decade in the previous three months, the statistics bureau said yesterday. The first
acceleration in growth in more than two years came after the government implemented a 4 trillion yuan
($585 billion) stimulus plan and prodded banks to lend more. China is the only one of the 10 biggest
economies that is expanding, highlighting the role the nation may play in easing the worst global
recession since the Great Depression. The U.S. economy is still shrinking, five months after Congress
agreed to President Barack Obama’s $787 billion stimulus package. “China cannot save the world by
itself, but its recovery is a definite positive,” said Brian Jackson, a strategist at Royal Bank of Canada in
Hong Kong. “China has a lot more control over how its banks do business and they were in a lot
stronger position than U.S. banks to implement policy stimulus.” The Chinese economy will expand 8.1
percent this year, according to the median forecast of 16 economists surveyed by Bloomberg News after the
government released the second-quarter figure. Growth will accelerate to 9.1 percent in 2010, they
estimated. The pickup, driven by tax cuts and government-funded incentives to encourage consumers
to buy automobiles and electronics goods, is bolstering demand for imports.
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Link- Social Services
Social service spending panics investors and increases debt, leading to an economic
collapse.
Sawhill 7/11 (‘Stop Kicking the Fiscal Can Down the Road’, Isabell Sawhill, Ph.D. in Economics from New York
University and Senior Fellow of Economic Studies at the Brookings Institute, June 11, 2009,
http://www.brookings.edu/opinions/2009/0611_fiscal_responsibility_sawhill.aspx)
While the government has been busily bailing out the private sector, few people seem to be worrying about who's going to bail out
the U.S. government when our creditors tire of lending us so much money. The nation's fiscal imbalances are
already driving up interest rates, which could imperil economic recovery. So, as Fed Chairman Ben Bernanke warned recently,
it's time for Congress and the administration to get serious about how we are going to get our fiscal house in order once
the recession is over. Ironically, just last month it started raining down checks from the Treasury on virtually all of us who are
over the age of 65, regardless of whether or not we needed the money, thereby adding to the deficit. Our additional $250 good fortune, as
beneficiaries of Social Security, Medicare, or any number of other government entitlement programs , came courtesy of
the American Recovery and Reinvestment Act (aka, the stimulus). The idea is that most of the money will be spent and thus help to end the
recession, a worthy objective. Some seniors of course do need the extra money to pay the electric bill or its equivalent, given these tough
economic times. The electric company will thank them for spending it, and more important, so will all the people who might otherwise have lost
their jobs as the result of a deeper recession. But not all of the money will be spent. Many seniors have more than enough money to live on, and
will save the money instead of spending it, doing nothing to help end the recession. My own check was deposited directly into my bank account
with the result that I wasn't even aware that it had come. For those of you, who like me, are planning on simply squirreling away the money in a
bank or brokerage account, I have a better idea. Set up, or add to, a savings account for a grandchild and send an e-mail to your elected
representatives and others to let them know that citizens like you are concerned about our national profligacy. You will not only be doing a good
deed for a future debt-burdened generation, you will be sending a message to Congress and the administration that they need to start thinking
about the pernicious mountain of debt we are leaving to our children and grandchildren. As someone who has spent an inordinate amount of time
talking about the need to put our long-term fiscal house in order, I have been frustrated by how little impact all of this talk has had. Sadly, year
after year, our elected leaders in Congress and the White House -- regardless of which party is in charge -- have put off the task of bringing
spending and revenues into better balance. In the 1990s, when I was a White House budget official, we actually had surpluses in the federal
budget. But since that time, we have put just about everything on the national credit card. And like any credit card, we are paying interest ... but in
this case, much of it to foreign countries, many of whom don't even like us very much. Recently, we have borrowed to fund the Bush tax cuts, the
Medicare drug bill (another costly give-away to my generation), the war on terror, the financial and auto bailouts and spending packages to help
prevent or hasten the end of the recession. While President Obama inherited a big fiscal hole, he is digging it deeper than his
predecessor. Yes, he should be applauded for holding a Fiscal Responsibility Summit and talking about a new era of responsibility, but his
attempts at actually putting the pedal to the metal have been largely symbolic thus far. First, he called his Cabinet together and asked them to
immediately cut $100 million, which is the equivalent of removing one drop from a glass of water. Ridiculed by many for this exercise, he
followed up with a second attempt, in this case asking federal agencies to cut $17 billion -- a very small sip of water from that same glass. This
year, the deficit will be $1.8 trillion and the national debt as a proportion of GDP is projected to double between
2008 and 2019 under the president's proposed budget -- primarily because of the continued growth of spending on
entitlements and an unwillingness to raise taxes to pay for them. While I believe that large deficits are appropriate in a time of recession
because the government is the only spender left in town to make up for the private-sector contraction, I also believe that actions should be
taken now to shore up our longer-term fiscal situation, restore confidence among our increasingly nervous creditors
(primarily the Chinese), prevent another economic crisis down the road , and leave a better fiscal legacy to the next generation.
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Increasing social service costs lead to investor crisis, killing the U.S. economy.
Pakko 09 (‘Deficits, Debt, and Looming Disaster’, Ph.D. in Economics from the University of Rochester, Research
Officer for the Federal Reserve Bank of St. Louis, for the Regional Economist, January 2009,
http://research.stlouisfed.org/publications/regional/09/01/debts.pdf)
While the immediate impacts of government deficits and debt are a matter of some controversy, most economists agree that the long-term fiscal
outlook for the U.S. requires serious attention. The retirement of the Baby Boom generation and a slowing rate of growth in the labor force will
create a demographic time bomb in which entitlement growth threatens to swamp available resources. As mentioned earlier, the Social
Security trust funds are projected to begin running down in 2017. By 2041, they are expected to be depleted.6 One
way of measuring the long-run shortfall is to estimate the present value of unfunded obligations, that is, to estimate how much money would be
needed, in today’s dollars, to pay for future promises in excess of expected tax revenues. In the case of Social Security, the U.S.
Treasury estimates that paying promised benefits through the year 2081 would require $6.8 trillion, in addition to
taxes collected under current law.7 The situation is even more dire when we consider health-care costs. The
unfunded obligations of Medicare parts A and B amount to a present value of $25.7 trillion. Medicare Part D
(prescription drug coverage) adds another $8.4 trillion. All told, the shortfall for government social insurance
programs comes to a present value of $40.9 trillion. This is the government’s official estimate—some private sector economists
suggest that the total burden is even greater. Economist Lawrence Kotlikoff has recently estimated the total unfunded liabilities of current federal
programs at $70 trillion.8 Figure 2 displays recent forecasts from the Government Accountability Office, illustrating the budget implications of
these trends. The upper panel shows accelerating deficits over the next seven decades. Assuming revenues held constant at the historical average
of 18 percent, these projections show the deficit rising to over 40 percent of GDP by 2080. The lower panel of Figure 2 shows the
implications for the federal debt: an exponential rate of increase that reaches over 600 percent of GDP by 2080. This
would far exceed any level of government borrowing in history. These projections are unlikely to actually occur. The trends
are unsustainable. Long before reaching such unprecedented level of borrowing, there would surely be a crisis of
confidence among U.S. creditors, both domestic and foreign. Current measures of the federal deficit and the national debt, as dismal
as they might appear, fail to reflect full consequences of current-law fiscal policy. The unfunded future liabilities of government
entitlement programs imply rising deficits and a ballooning public debt far larger than today’s shortfalls. And debates about the
immediate economic impact of government deficits on private savings and interest rates, while of academic interest, fail to address the full
importance of these longrun consequences. Fundamental reform of entitlement programs is critical for putting U.S. fiscal
policy on a long-run sustainable path.
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Welfare Links
Welfare spending depresses the economy-GM proves
Samuelson 6/22/09 (Robert Samuelson-Contributing editor to Newsweek and The Washington Post, “Welfare in a
Bad Way,” Washington Post, 6/22/09
What most Americans identify as government "welfare" are payments to single mothers, food stamps and (perhaps)
Medicaid, the federal-state health insurance program for the poor. But that's not the half of it. Since 1960,
government has changed radically. Then, 52 percent of federal spending went for defense, 26 percent for "payments
for individuals" -- the welfare state. By 2008, 61 percent consisted of "payments for individuals," 21 percent for
defense. Social Security and Medicare -- programs for the elderly -- represented the biggest share: $1 trillion in
2008. Most Americans don't consider these programs "welfare," but they are. Benefits are paid mainly by present
taxes; there's little "saving" for future benefits; Congress can alter benefits whenever it wants. If that's not welfare,
what would be? Pressures on private and public welfare won't abate. The economic conditions that encouraged
corporate welfare have long since vanished. In 1955, GM, Ford and Chrysler accounted for 95 percent of U.S. light
vehicle sales, reports economist Thomas Klier of the Chicago Federal Reserve. With market dominance and
technological leadership, the Big Three assumed they could pass along to customers the costs of job guarantees, high
wages and fringe benefits. Eager to defuse the class warfare of the 1930s -- and to avoid unionization -- many U.S.
companies imitated the model. They, too, believed that competition would be limited and technological change
could be controlled. These conceits are gone (in 2008, the Big Three's market share was 48 percent and dropping).
Now, companies are hypersensitive to competitive and economic threats. A survey of 141 companies by Watson
Wyatt consultants found that 72 percent recently cut jobs, 21 percent reduced salaries and 22 percent curtailed
matching 401(k) contributions. In theory, expanding public welfare could offset eroding private welfare. President
Obama's health-care proposal reflects that logic. The trouble is that the public sector also faces enormous cost
pressures, driven by an aging population and rising health costs. The Congressional Budget Office projects the
federal debt will double as a share of the economy (gross domestic product) to 82 percent of GDP by 2019. Any
sober examination of figures like these suggests that the system has promised more than it can realistically deliver.
We are borrowing not to finance investment in the future but to pay for today's welfare -- present consumption.
Sooner or later, the huge debt will weaken the economy. Nor would paying for all promised benefits with higher
taxes be desirable. Big increases in either debt or taxes risk depressing economic growth, making it harder yet to pay
promised benefits. The U.S. welfare state is weakening; insecurity is rising. The sensible thing would be to decide
which forms of public welfare are needed to protect the vulnerable and to begin paring others. Our inaction poses
another dreary parallel with GM. It was obvious a quarter-century ago that GM the auto company could not support
GM the welfare state. But the union wouldn't surrender benefits, and the company acquiesced. Inertia prevailed, and
the reckoning came. The same cycle, repeated on a national scale with sums many multiples higher, would be
correspondingly more fearsome.
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HOMELESS AID LINKS
Aid for the homeless requires billions of dollars- funding snowballs as money needs to be
given to various agencies and funds.
CQ Weekly 5/18/09 (‘Fiscal 2010 Appropriations: Transportation-Housing’, Colby Itkowitz for CQ Staff,
http://library.cqpress.com.proxy.lib.umich.edu/cqweekly/document.php?id=weeklyreport111000003123315&type=hitlist&num=3&)
For Department of Housing and Urban Development programs, Obama’s chief goal is to keep low-income families
from losing their homes. His budget would restore $1 billion for a Housing Trust Fund, which provides grant money
to states to increase rental opportunities for the very poor and homeless. The budget proposes a $550 million
increase for the Community Development Block Grant program, which helps cities revitalize poor neighborhoods,
and $1.2 billion for Section 8 vouchers that help the poor, elderly or disabled pay their rent and help landlords
rehabilitate or construct housing for those groups. The president would increase loan guarantees through the Federal
Housing Administration (FHA), which subsidizes some home loans. Principal limits under the Mutual Mortgage
Insurance Fund would increase to $400 billion from $315 billion, and Government National Mortgage Association
guarantees to $500 billion from $300 billion.
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BLOCK GRANT LINKS
Block grants for social services for persons in poverty empirically cost billions of dollars.
Almanac of Policy Issues 2000 (‘Social Service Block Grant’,
http://www.policyalmanac.org/social_welfare/archive/ssbg.shtml)
Title XX of the Social Security Act, also referred to as the Social Services Block Grant (SSBG), is a capped
entitlement program. Thus, States are entitled to their share, according to a formula, of a nationwide funding ceiling
or ``cap,'' which is specified in statute. Block grant funds are given to States to help them achieve a wide range of
social policy goals, which include preventing child abuse, increasing the availability of child care, and providing
community-based care for the elderly and disabled. Funds are allocated to the States on the basis of population. The
allotments for Puerto Rico, Guam, the Virgin Islands and the Northern Marianas from the national total are based on
their allocation for fiscal year 1981 adjusted to reflect the new total funding level. The Omnibus Budget
Reconciliation Act (OBRA) of 1987 (Public Law 100-203) extended eligibility for title XX funds to American
Samoa. The Federal funds are available to States without a State matching requirement. Title XX of the Social
Security Act was created in 1975 (Public Law 93-647); however, it was OBRA 1981 (Public Law 97-35) that
amended title XX to establish a ``block grant to States for social services.'' The entitlement ceiling, or cap, was cut
from the fiscal year 1981 level of $2.9 billion to $2.4 billion for fiscal year 1982. PROGRAM GOALS The
purpose of the Title XX Social Services Block Grant Program is to provide assistance to States to enable them to
furnish services directed at one or more of five broad goals: Achieving or maintaining economic self-support to
prevent, reduce, or eliminate dependency; Achieving or maintaining self-sufficiency, including reduction or
prevention of dependency; Preventing or remedying neglect, abuse, or exploitation of children and adults unable to
protect their own interests, or preserving, rehabilitating or reuniting families; Preventing or reducing inappropriate
institutional care by providing for community-based care, home-based care, or other forms of less intensive care;
and Securing referral or admission for institutional care when other forms of care are not appropriate, or providing
services to individuals in institutions. States are given wide discretion to determine the services to be provided and
the groups that may be eligible for services, usually low income families and individuals. In addition to supporting
social services, the law allows States to use their allotment for staff training, administration, planning, evaluation,
and purchasing technical assistance in developing, implementing, or administering the State social service program.
States decide what amount of the Federal allotment to spend on services, training, and administration …. Although
$2.8 billion was the permanently authorized entitlement ceiling at the time, Congress appropriated only $2.381
billion for title XX in fiscal year 1996 (Public Law 104-134). The Personal Responsibility and Work Opportunity
Reconciliation Act (Public Law 104-193) subsequently set the annual entitlement ceiling for title XX at $2.38 billion
in each of fiscal years 1997-2002. Under this legislation, the entitlement ceiling was scheduled to return to the
permanent level of $2.8 billion in fiscal year 2003. (Enactment of Public Law 105-178 in 1998 would subsequently
lower this ceiling--see below.) Despite the newly established ceiling of $2.38 billion, Congress appropriated $2.5
billion for title XX in fiscal year 1997 (Public Law 104-208). In June 1998, the Transportation Equity Act (TEA,
Public Law 105-178) was enacted, including a provision which schedules the title XX ceiling to be reduced to $1.7
billion beginning in fiscal year 2001. This will result in reductions of $680 million in each of fiscal years 2001 and
2002 (from the previously scheduled ceiling of $2.38 billion), and annual reductions of $1.1 billion beginning in
fiscal year 2003 (from the previously scheduled entitlement ceiling of $2.8 billion). In addition to reducing the
ceiling, the TEA reduces the percentage of a State's annual TANF allotment that it may transfer to title XX,
beginning in fiscal year 2001, from 10 percent to 4.25 percent. The fiscal year 1998 appropriations measure (Public
Law 105-178) decreased title XX funding to $2.299 billion, once again below the $2.38 billion ceiling established
under the welfare reform law of 1996. In explaining the reduction, the Senate Appropriations Committee noted that
funding is provided for social services through other Federal programs. The House Appropriations Committee
expressed concern that DHHS lacked information on the effectiveness of SSBG-funded activities. Funding for title
XX continued to decline with a $1.909 billion appropriation under the Omnibus Consolidated Appropriations Act
for fiscal year 1999 (Public Law 105-277). For fiscal year 2000, the Consolidated Appropriations Act (Public Law
106-113) set title XX funding at $1.775 billion, of which $425 million may not be obligated to States until
September 29, 2000.
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Computer / Internet Link
Computers added in schools cost millions, and cost more with maintenance and upgrades.
Empirically computers are costly to install and maintain
Zwaagstra [Michael C., B.Ed., a Post-Bachelor's Certificate in Education, an M.Ed. in Educational Administration
from the University of Manitoba, the Klieforth Prize in American History, written policy papers on education, city
councilor; http://www.fcpp.org/images/publications/FB054%20Computers%20in%20the%20Classroomfinal.pdf]
February 2008
Thus, while it may be reasonable to include a moderate amount of computer instruction in public schools, we must
not delude ourselves into thinking that more computer use increases academic achievement. Computer technology is
expensive. The $26 million spent annually on information technology in Manitoba school divisions represents
almost 2 per cent of all educational expenditures in the province. In addition, computer technology is very expensive
and school divisions already spend more than $26 million per year in this area. Because computers rapidly become
obsolete, it is costly to keep school computer labs up to date. It would be more effective for computer instruction to
take place at the high school level rather than beginning at the early or middle levels.
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Disaster Relief Links
Andrew’s $12billion damage were light, with storms only getting worse
Clark, senior editor at the Association of Governing Boards of Universities and Colleges, veteran Washington
journalist, managing editor of The National Journal,writer and researcher at Time-Life Books, graduated in political
science from McGill University (Charles S, “Disaster Response,” CQ Researcher.) October 15, 1993
The $10 billion to $12 billion in damage from the flooding was inflicted even as tens of thousands in South Florida
were still digging out from the previous summer's Hurricane Andrew, the worst natural disaster ever to hit the
United States. Andrew's nearly $30 billion in total damages was quadruple the previous $7 billion record, set by
Hurricane Hugo in 1989. And things might have been worse. “If Andrew had struck 20 miles further north, through
the heart of Miami,” wrote Florida Insurance Commissioner Tom Gallagher, “it could have been a $50 billion hit.”
New meteorological evidence has added to the sense of urgency. The National Hurricane Center in Coral Gables,
Fla., announced in April 1992 that the country may soon enter a new weather cycle likely to produce more frequent
“super-hurricanes.”“In the 1940s, '50s and early '60s, we had a lot of intense storms with 115-mile-an-hour winds,
usually with one every year on the East Coast,” says William Gray, a professor of atmospheric sciences at Colorado
State University. “Then there was a downturn from about 1965 to the present, in spite of Hugo and Andrew. The
cycle correlates with the decades-old West African drought, which will likely be changing to a wet cycle soon. If
that happens, it is inevitable that we will see a return of many more-intense storms.”
Hurricane Katrina caused hundreds of billions in damages,
USA today- 05-bKatrina damage estimate hits $125B (USATODAY, 9/9/2005,
http://www.usatoday.com/money/economy/2005-09-09-katrina-damage_x.htm)
Hurricane Katrina caused at least $125 billion in economic damage and could cost the insurance industry up to $60
billion in claims, a leading risk assessment firm said in updated estimates Friday. That's significantly higher than the
previous record-setting storm, Hurricane Andrew in 1992, which caused nearly $21 billion in insured losses in
today's dollars. Risk Management Solutions of Newark, Calif., said its revised damage figures reflect, in part, the
ravages of heavy flooding in New Orleans, which has prompted officials to try to evacuate the city. "About half of
the economic losses would be attributable directly to the flooding," said Laurie Johnson, an RMS vice president. She
added that the flooding also makes it harder to project final losses. "The longer these flood waters sit there and toxic
deposits build up that need to be cleaned up ... the longer the recovery line," Johnson said. She estimated damage to
infrastructure such as roads and bridges and the utility system in New Orleans alone at more than $10 billion.
Economic losses include projections of property damage to homes, cars, ports, refineries and public property as well
as the disruption of businesses in the disaster area, which extends from Louisiana to Mississippi and Alabama,
Johnson said. Johnson said RMS sent assessment teams into the area on the ground and by air. The latest RMS
report put insured losses in a range of $40 billion to $60 billion. A week ago, RMS had estimated total economic
losses in excess of $100 billion and insured losses in a range of $20 billion to $35 billion. Two other risk firms said
Friday they were holding to earlier estimates until more information is available. AIR Worldwide, a risk-modeling
firm based in Boston, has estimated insured losses in a range of $17 billion to $25 billion.
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Drug Trafficking / Border Control link
Stopping drug trafficking and illegal immigrants spends substantial amounts of money160,000 per worker
Kouri 09 (Jim Kouri-Law Enforcement Examiner, “GAO: Funding Needed For New Border Patrol Agents,”
Examiner.com, 6/19/09, http://www.examiner.com/x-2684-Law-Enforcement Examiner~y2009m6d19-GAOFunding-needed-for-new-Border-Patrol-agents)
To strengthen control of the US borders, the Department of Homeland Security's US Customs and Border Protection
directorate increased the number of Border Patrol agents from about 12,300 in September 2006 to 18,875 in April
2009, an unprecedented 53 percent increase in about 2.5 years. Yet, critics claim the increase is too little to make a
significant dent in the number of criminals and terrorists --and their contraband -- illegally entering the US. One
critic, a former New York Police detective points out that New York City -- with a population of about eight million
people -- possesses a police force of over 40,000 officers, not to mention civilian employees such as dispatchers,
police administrative aids, tow truck drivers, and many others." When one city's police department approaches
50,000 members compared to a federal agency with less than 20,000 agents is tasked with protecting the entire
nation's borders, something is definitely wrong," said Det. Sidney Frances. In addition, law enforcement leaders are
aware that there are never 18,875 Border Patrol agents on duty at the same time. In order to cover one post or patrol
position for 24 hours, seven days per week, it takes 4.5 men or women for each agent position. Add to that sick
leave, holidays, vacations, etc. and if there are 5,000 agents on duty at both borders during a shift, that may
be considered a full complement. The Border Patrol plans to add additional agents during the remaining months of
fiscal year 2009, increasing its onboard strength to about 19,700 agents by the end of September 2009. To support
the President's yearly budget request for funding for additional Border Patrol agents, Customs and Border Protection
first identified a list of cost items associated with the recruiting, hiring, training, equipping, and deploying of a new
Border Patrol agent. These cost items include, for example, recruiting functions: background checks and medical
exams to determine an applicant's fitness for the Border Patrol; salary and benefits; training at the Border Patrol's
training academy in Artesia, NM; and equipment such as night-vision goggles, mobile radios, and uniforms. All of
these cost items are then added together to arrive at what CBP refers to as the Position Cost Model (PCM), the
incremental dollar amount needed to recruit, hire, train, equip, and deploy one additional Border Patrol agent. CBP
then multiplies the PCM amount by the number of additional Border Patrol agents CBP expects to hire in a
particular fiscal year to estimate the funding needed for these additional agents. This budget estimate is then
incorporated into the President's overall budget request for CBP. In total, the PCM used to support the President's
2009 budget request for additional Border Patrol agents contained 93 individual cost items totaling $159,642; that is,
CBP estimated it would need $159,642 for each additional agent hired in fiscal year 2009. As a result, for fiscal year
2009 the President requested an additional $362.5 million over the Border Patrol's fiscal year 2008 funding level to
increase the Border Patrol agent workforce by 2,200 agents. Of this amount, $351.2 million was generated by the
PCM estimate ($159,642 x 2,200) and the remaining $11.3 million was for additional support staff, vehicles, and
equipment not included in the PCM estimate. The accuracy of estimates for the individual cost items that constitute
the PCM is crucial to CBP developing a reliable budget request for new agents.
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Food Stamps Links
Food Stamp programs have been increasing, with $1.6Billion more put into food stamps
Koch assistant managing editor, graduated in journalism from the University of North Carolina at Chapel Hill,
specializes in social-policy issues [Kathy, Hunger in America December 22, 2000]
Children are suffering disproportionately from the drop in food stamp participation, according to the General
Accounting Office (GAO), which said that in 1997 children accounted for 48 percent of the decrease in
participation. “Children's participation in the food stamp program has dropped more sharply than the number of
children living in poverty, indicating a growing gap between need and assistance,” the GAO said. “We're not
making any progress in fighting hunger because cuts in the food stamp program are offsetting the positive effects of
the economic boom,” complains FRAC President James Weill. Other causes of hunger among low-income working
families are the “stratospheric cost of housing,” the cost of quality child care and the absence of reliable
transportation to work, 68 members of Congress said in a “Dear Colleague” letter in October. They called the
persistence of hunger and food insecurity in America “particularly troubling in this time of great prosperity.”The
same month, Congress passed a measure relaxing food stamp eligibility rules. Signed into law on Oct. 28, it is
expected to provide $1.6 billion more in food stamp benefits over five years, increase benefits for needy families
and allow new families to participate in the program.
The majority of food stamp programs are multi-million dollar programs at least
Leepson, M.Hunger in America. In Editorial research reports 1983 (Vol. II). Washington
http://library.cqpress.com.proxy.lib.umich.edu/cqresearcher/document.php?id=cqresrre1983093000&type=hitlist&n
um=4) (1983).
Some 22 million Americans receive food stamps today, at a monthly federal cost of about $1 billion. In 1981 the
Reagan administration changed the food stamp eligibility rules, limiting eligibility to households with total incomes
below 130 percent of the federally defined poverty level. Previously families with incomes at or below the poverty
level qualified for the program, but recipients were allowed to deduct items such as housing costs. This made the
cutoff income limit for many recipients much higher than the federal poverty level. The government's Special
Supplemental Food Program for Women, Infants and Children (WIC) provides monthly food packages to pregnant
women, infants and young children up to four years old. The $1.1 billion program serves about 2.5 million
Americans. To be eligible for WIC, a family's income must be at or below 185 percent of the poverty line —
$17,210 for a family of four. There must also be some indication of nutritional need, such as anemia or history of
low-birthweight babies. The government will distribute some 2.1 billion pounds of food to needy persons this year
through WIC and other food and nutrition programs. These include: School Lunch — a $3 billion-a-year program
that will provide government-subsidized lunches to 22.9 million eligible schoolchildren in 1983. School Breakfast
— a $327 million-a-year program that will provide government-subsidized breakfasts to 3.4 million eligible
schoolchildren this year. Summer Food Program — a $99 million program that provided lunches to 1.4 million
children in needy areas this summer when school was not in session. Child-Care Food Program — a $334 million
endeavor providing federal funds for meals served to some one million children in day-care centers. Commodity
Supplemental Food Program — a $32 million program that will provide monthly food packages to about 135,000
pregnant women and young children this year. The program is similar to WIC, but provides the actual food rather
than a voucher and distributes a greater variety of food than is available through WIC.
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Violence against Women Reform link
VAWA is working, but with a price
Prah, Johns Hopkins Master’s degree, Ohio University Journalism Degree, January 6, 2006 [Pamela M., “Domestic
violence”, http://library.cqpress.com.proxy.lib.umich.edu/cqresearcher/cqresrre2006010600, June 25, 2009.
Since Congress passed the bipartisan and groundbreaking Violence Against Women Act (VAWA) in 1994, the
criminal-justice and community-based responses to domestic violence, dating violence, sexual assault and stalking
have significantly improved. Ten years of successful VAWA programs have helped new generations of families and
justice professionals understand that society will not tolerate these crimes. Congress improved VAWA when it
reauthorized it in December 2005. Since 1994, lawmakers have authorized more than $5 billion for states and local
programs under VAWA. This relatively small amount has had a huge impact on local communities. For example,
the number of women murdered by an intimate partner declined by 22 percent between 1993 and 2001. Also, more
women came forward to report being abused in 1998 than in 1993.
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Veterans Cost link
Providing disability benefits and medical care to veterans will cost more 650 billion
Bender 07 (Bryan Bender-Boston Globe Staff Writer, “Iraq Veteran Healthcare Could Top $650b” Boston Globe,
11/9/07, ttp://www.boston.com/news/nation/articles/2007/11/09/iraq_veteran_healthcare_could_top_650b/)
WASHINGTON - A group of noted physicians predicted yesterday that healthcare for Iraq veterans could top $650
billion, another warning of a looming social crisis as thousands of veterans struggle with mental and physical
disabilities and other disruptions to family life. The study by Physicians for Social Responsibility, titled "Shock and
Awe Hits Home," marked the first attempt to isolate the financial costs of "the wide-ranging traumatic mental and
social effects of the Iraq war." The liberal group, which shared the 1985 Nobel Peace Prize, estimated that the longterm financial burden to care for a new generation of veterans will far outstrip the amount of money spent on combat
operations in Iraq. "Providing medical care and disability benefits to veterans will cost far more than is generally
being acknowledged," according to the study, overseen by Dr. Evan Kanter, a psychiatrist and neuroscientist at the
University of Washington and a staff physician for the Department of Veterans Affairs. "As physicians and
healthcare professionals, we are acutely aware of the actual price we are paying in human terms, and we are
compelled to bring this to the attention of the Congress and the American people," the report added. The estimate
was derived by analyzing the current costs of treating debilitating health problems of troops in Iraq, including blast
injuries to arms and legs from improvised explosive devices; the historically high instances of traumatic brain
injuries; and post-traumatic stress disorder, which the VA believes affects at least one-third of soldiers serving there.
Since the 2003 US-led invasion of Iraq, at least 60,000 US service members have been wounded or become
mentally ill from their battlefield experiences. Due to advances in body armor and battlefield medicine, the ratio of
wounded to killed is 8 to 1, compared with 3 to 1 during the Vietnam War and 2 to 1 for World War II. The
percentage of amputees is the highest since the Civil War. The analysis assumed that, at the current pace, as many as
2 million men and women will be deployed to Iraq through the end of the conflict. It also relied on available figures
for veterans' disability payments. For example, a veteran without a spouse or dependents who is 100 percent
disabled receives about $2,400 per month from the government. Over 50 years, that could total more than $1.4
million. The report said that healthcare costs could go even higher. It did not account for thousands of civilian
contractors serving in Iraq, including more than 1,000 who have filed disability claims with the Department of Labor
seeking government compensation. The report came amid other new signs of the growing toll of the war on soldiers
and their families.
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Abortion link
Abortion support, even at a small level, costs millions annually.
NNAF 09 (‘About Abortion Funds’, National Network of Abortion Funds, http://www.nnaf.org/aboutfunds.html)
When women and girls cannot afford to pay for a safe, legal abortion, they can turn to the members of the National
Network of Abortion Funds for help. Abortion Funds are groups that provide direct financial assistance to cover the
cost of abortion care. Many abortion Funds also help pay for emergency contraception and offer additional
information and support. Some abortion Funds provide related services, including transportation to a clinic, housing
for women who must travel far from home to reach a clinic, child care during the procedure, options counseling, and
additional funding for ultrasound, pregnancy testing, or follow-up care. Today, our Network includes over 100
abortion Funds in more than 40 states. Most of these abortion Funds are independent, grassroots, non-profit
organizations run by volunteers. Some Funds are affiliated with progressive religious organizations, coalitions, or
non-profit clinics. Only a few abortion Funds have paid staff members. Some Funds have hotline services and take
calls directly from women seeking help, while others work through family planning and abortion clinics. Most
Funds help women in a specific geographic area; some Funds help women all over the country. Abortion Funds
raise money from individuals as well as from some private foundations. Each year, our member Funds raise and
disperse over $2 million to help more than 20,000 women who would not otherwise be able to obtain abortions.
Most Funds provide direct funding for abortions in the form of grants. About one-quarter of member Funds give
assistance in the form of loans. Because most of the women helped have incomes below the poverty level, none of
the abortion Funds expect full repayment of loans.
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Hyde Amendment Links
Hyde Amendment is the first act to limit federal funding of abortion
Leepson, M (“Abortion: decade of debate”. In Editorial research reports 1983 (Vol. I). Washington, CQ Researcher
1983.
Since 1973, abortion foes have tried in every Congress to pass a constitutional amendment to ban the procedure. But
until 1982, no anti-abortion legislation had ever been approved by a congressional committee. However, abortion
foes have been successful in getting Congress to attach to a variety of appropriations bills riders prohibiting federal
financing of nearly all abortions except those necessary to save the life of the mother. The Supreme Court has upheld the
power of Congress and the state legislatures to deny use of public funds for abortion. In the most recent such ruling, the court in 1980
said that Congress acted constitutionally when it approved the so-called Hyde amendment — named for sponsor
Rep. Henry J. Hyde, R-Ill., a staunch pro-life advocate — which limited Medicaid funding of abortions to those
required to save a mother's life or to terminate a pregnancy resulting from incest or rape.
The Hyde Amendment is holding back the tide on abortion rates; if removed, abortions
would unquestionably increase
Clapper Executive Director of Louisiana Right to Life, a statewide pro-life organization, graduate of Loyola
University New Orleans, triple major in philosophy, religious studies and political science. a founder of Louisiana
Students for Life, [Benjamin, “Saving our Hydes: Losing Pro-Life Amendment Could Drastically Increase
Abortions”, http://www.lifenews.com/nat4684.html] December 30, 2008
There is no question that if FOCA passes, it would usher in the largest expansion of abortion since 1973. In fact, I
believe our advocacy has been so potent that it has made pro-abortion forces lower the passage of FOCA on their list of priorities (maybe only to
day 101). While we must press on against FOCA, we must not forget another serious, and maybe even more pertinent, threat: the termination of
the Hyde Amendment. The Hyde Amendment, originally enacted in 1976, is a pro-life limitation amendment in the
annual appropriations bill that restricts the direct federal funding of abortion through Medicaid. Without the Hyde
Amendment, women eligible for Medicaid would have their abortions paid for by the Federal Government – in other
words, OUR tax dollars. If abortions are free to the individual, you can bet on abortion rates increasing. Because
Hyde is an “amendment in the annual appropriations bill”, the Hyde Amendment must be passed every year to
protect our tax dollars. FOCA may or may not come to the surface in 2009; however, the Hyde Amendment will
have to be dealt with in 2009, making it a serious and pertinent threat to unborn human life. The abortion industry
has ranked the termination of Hyde as Priority #1 when it comes to abortion for the first 100 days of the Obama
Administration. Just take a look at the top left of page 7 in the abortion industry’s “Advancing Reproductive Rights
and Health in a New Administration” released earlier this week.
An individual abortion can cost between 350 and 1000 dollars, and there are few state
funds to help cover the cost
Dudley, PhD, McMaster University professor of Biology, 2003[Susan, “Economics of Abortion,”
{http://www.prochoice.org/about_abortion/facts/economics.html}, June 25th, 2009]
The exact cost of an abortion depends on many factors, such as how far along the pregnancy is, the kind of
procedure and anesthetic that are used, and the kind of facility (clinic, physician's office, or hospital). In general,
though, women getting an abortion between six and ten weeks' gestation can expect to pay about $350 at an abortion
clinic and $500 at a physician's office. Providing abortions later in pregnancy is somewhat more complicated, and is
usually more expensive. For example, at 16 weeks gestation, abortion clinics generally charge around $650 and
physicians' offices generally charge around $700. After the 20th week, the cost rises to above $1,000. Other costs might
result if care is not available locally. These might include travel costs, costs for overnight stays, or lost wages in states requiring waiting periods between pre-abortion
counseling and the abortion itself. Paying for abortion is not usually a problem for middle- and upper-income women, because the majority of private medical
insurance plans and HMO organizations currently cover abortion services. However, the availability of abortion funding for low-income women is controlled by
elected government officials. Since
1978, Congress has imposed a restriction on the use of federal money to cover abortion.
This restriction, known as the Hyde Amendment, forbids federal funding of abortions except in cases of rape, incest,
or when a woman's life is endangered. The restrictions apply to Medicaid, the government program that pays for medical care for
many low-income families, as well as other federally funded medical programs such as those for Native American women, military personnel and their dependents,
and Peace Corps volunteers. Only 23 states use their own funds to cover abortion services beyond the Hyde Amendment's restrictions.
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Teen Pregnancy Links
Comprehensive aid for pregnancy costs millions.
Jodi Jacobson, executive director of the Center for Health and Gender Equity, 09 (‘Yes We Can’, Jodi Jacobson for
Ms., http://proquest.umi.com.proxy.lib.umich.edu/pqdweb?index=19&did=1699517171&SrchMode=1&sid=1&Fmt
=3&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1245958401&clientId=17822)
Obama's stimulus bill - The American Recovery and Reinvestment Act - offered another key victory for women and
their families, this time on the U.S. domestic front. The stimulus includes greatly increased funding for early
childhood education as well as more funding for Medicaid, a program that provides more than 20 million adult
women with health services. There was one disappointment for women in the final package: The bill did not include
a much-discussed provision making it easier for states to expand eligibility for family planning services under
Medicaid. However, the president made up for this compromise by including the provision in his proposed budget
for fiscal year 2010, which was awaiting Congressional modifications in April. The next provision of great interest
to women came in the fiscal year 2009 omnibus spending bill, signed into law in early March. It includes the
Affordable Birth Control Act, which immediately lowers the costs of and increases access to birth control for lowincome and college women. In the Deficit Reduction Act of 2005, Congress had tightened eligibility for nominally
priced drugs, which inadvertently cut off colleges and safetynet medical providers from obtaining low-cost birth
control. As a result, until the omnibus legislation passed, college and low-income women had been paying up to 10
times more than previously for their monthly birth control prescriptions. The omnibus package also included the first
round of increased funding for health programs critical to women's lives. Title X, which provides family planning
services for low-income families, received an increase of $7.5 million over the $300 million appropriated in fiscal
year 2008, while $498 million was added to U.S. global AIDS funding and $150 million more to international
family planning programs.
Teen pregnancy aid costs millions, even on a small scale.
US FED NEWS SERVICE 5/11/09 (‘MICHIGAN DEPARTMENT OF COMMUNITY HEALTH AWARDS $1.4
MILLION TO TEEN PREGNANCY PREVENTION PROGRAMMING FOR MICHIGAN'S YOUTH’,
http://proquest.umi.com.proxy.lib.umich.edu/pqdweb?index=12&did=1706562671&SrchMode=1&sid=1&Fmt=3&
VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1245958401&clientId=17822
LANSING, Mich., May 8 -- The Michigan Department of Community Health issued the following news release:
The Michigan Department of Community Health (MDCH) is pleased to announce that it has awarded more than
$1.4 million to four recipients of the Teen Pregnancy Prevention Initiative (TPPI). These awards will expand the
teen pregnancy prevention program at MDCH, which currently includes the Michigan Abstinence Program, Child
and Adolescent Health Center Program, Michigan Model for Health Program and Family Planning Services. The
goal of the TPPI is to reduce the rate of teen pregnancy in Michigan. The new awardees will provide comprehensive
evidence-based pregnancy prevention programs to youth 10-18 years of age that target factors that lead to the
delayed initiation of sex as well as promoting and encouraging abstinence as the safest choice. Each recipient will
receive about $50,000 through the end of the 2008-2009 fiscal year. They will then receive $100,000 each every
fiscal year through Sept. 30, 2012. The newly funded TPPI awardees include: 1. Baldwin Family Health Care 2.
District Health Department #10 3. Planned Parenthood Mid and South Michigan 4. Planned Parenthood of West and
Northern Michigan
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Prenatal Care Link
Prenatal care costs 654 million per year-feds must reimburse states
American Medical Association 90 ( American Medical Association 90,“Effects of Medicaid eligibility expansion
on prenatal care and pregnancy outcome in Tennessee,” 1990, http://www.faqs.org/abstracts/Health/Effects-ofMedicaid-eligibility-expansion-on-prenatal-care-and-pregnancy-outcome-in-Tennessee-part-2.html)
The federal government has tried to lower the nation's high infant mortality rate by increasing programs for prenatal
care. In spite of spending $654 million per year, no one knows whether these programs are effective. As of April 1,
1990, new Medicaid eligibility criteria required the states to include pregnant women and infants with family
incomes up to 133 percent of the poverty line, for which the states are reimbursed by the federal government from
50 to 80 percent of Medicaid expenditures. However, some states may fund these required expansions by reducing
other health programs, such as prenatal care clinics, thereby canceling the intended increase in prenatal care. The
authors studied all live births in Tennessee over three years, finding 62,946 births that met their criteria. Twenty-two
percent of the mothers were enrolled in Medicaid before the expansion on July 1, 1985, and 29 percent were
enrolled after. Although rates of enrollment increased, there were no corresponding improvements in access to
prenatal care, birth weight, or neonatal mortality. Maternal groups with the most problems also had the highest rates
of Medicaid enrollment, suggesting that expansion of Medicaid alone does not ensure better outcomes. Both before
and after the change in eligibility requirements, two thirds of the mothers enrolled after the first three months of
pregnancy, perhaps because Medicaid rules required a woman to be pregnant before applying, and the enrollment
process is long, making early prenatal care impossible. In addition, eligibility is based on family income after
medical expenses, so that women with no previous illness become eligible only after incurring pregnancy-related
medical expenses, probably late in pregnancy. Recently Tennessee began issuing temporary cards, thus shortening
the process. Nonfinancial barriers include lack of obstetricians who accept Medicaid, lack of awareness of
eligibility, and lack of transportation. Progress in reducing infant mortality may require changes in both financial
and nonfinancial barriers to prenatal care in order to be effective. (Consumer Summary produced by Reliance
Medical Information, Inc.)
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Legal Services Link
Depending on type of legal work, lawyers on average are paid $90,300; with legal services
even higher
Job-Employment-Guide [“Average Lawyer Salary”, http://www.job-employment-guide.com/average-lawyersalary.html, June 24, 2009] 2007
The average lawyer salary varies with experience, location and qualification. But to get an indicative figure of what
lawyers are earning, here are some figures. The average lawyer salary in the US was pegged at $90,300 by the
Bureau of Labor Statistics. The range spreads from the lower end of about $44,500 to the higher end of over
$146,000. The more successful lawyers normally practice privately. However a considerable number of lawyers are
hired by the following industries and the average salaries paid to the lawyers are given in brackets – Companies and
enterprises: $131,900; Federal government $98,800; Legal services $93,900; Local government $69,700; and State
government $67,900. Naturally these are the industries that a successful lawyer would be looking at getting
employed if he or she is not in private practice.
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Prison Services Link
Prison Services require significant spending-Michigan proves
Grand Rapids Press Editorial Board 09 (Grand Rapids Press Editorial Board-2007 Top 100 Daily Newspapers,
“Editorial: Analyze Privatizing Prison Services”, 6/20/09, http://www.mlive.com/opinion/grandrapids/index.ssf/2009/06/editorial_analyze_privatizing.html)
The bill introduced by Sen. Roger Kahn, R-Saginaw Township, and co-sponsored by Sen. Wayne Kuipers, RHolland, would require DOC to solicit competitive bids from the private sector for all purchases of goods and
services for the department, including food service and transportation services. The bill was referred to the Judiciary
Committee, chaired by Mr. Kuipers. Now the fear of privatizing prison services is that companies will cut costs by
cutting corners at the expense of quality and inmate health and safety. But state officials must carefully scrutinize a
bidding company's background as well as ensure proper monitoring to safeguard against those problems. Given
critical reports by the auditor general last year regarding food service and transportation services in prisons, those
would be ideal areas to evaluate to see if savings are possible. The auditor's June 2008 report stated that DOC needs
to consider additional ways to reduce the costs of proving prisoner meals. Analysts estimated the state could save up
to $38 million if it used a private contractor for food service operations, as is done in Kansas and other states.
During fiscal year 2006-07, Michigan spent $37.2 million on food service staff wages. At that time, there were 490
state employees plus 5,400 prisoner employees. Some states such as Ohio and Virginia don't have their whole
system under contract. Rather, they use contracts in a couple facilities. DOC food purchases cost taxpayers about
$46 million. The report said staff did not consistently ensure that they obtained food commodities at the best prices,
missing out on savings. In December, auditors reported the DOC could increase efficiency and save money through
management improvements in prisoner transportation services. Some of the recommendations were suggested more
than a decade earlier. The cost of prisoner transportation was $23.6 million during fiscal year 2006-07. In 1996, it
was $14.2 million. These two services could be prime candidates for cost savings from privatization. The numbers,
not union pressure or fear of trying something new, should decide if it's in the public's interest. Michigan cannot
afford any sacred cows as it tries to regain its financial footing.
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Medicaid Link
Costs of Medicaid remain high despite government’s attempts to scale back
Adams, editor for Change, July 16, 2004 [Rachel, Medicaid reform,
http://library.cqpress.com.proxy.lib.umich.edu/cqresearcher/cqresrre2004071600, June 25, 2009]
Now facing plummeting revenues, many states are scaling back. Oregon already has had to cut some Medicaid
benefits and services. But with a reputation for adopting innovations to help the uninsured, state officials are
considering ways to avoid deeper cuts, including taxing hospitals and other health care providers. Pressure to
overhaul Medicaid has increased in recent years as total federal and state expenses for the program jumped nearly
$100 billion in five years: from $159.9 billion in 1997 to $258.2 billion in 2002. In fact, the percentage of state
resources consumed by Medicaid has doubled in the past 15 years — from 10 percent in 1989 to 20 percent today.
Most governors — who, unlike Congress, must balance their budgets each year — say declining tax revenues force
cuts in health care for the poor, which otherwise would crowd out demands for schools, roads and other services.
After education, Medicaid is the largest drain on state budgets. Medicaid projects that it will spend approximately
$90 billion in federal and state dollars on long-term services in fiscal 2004, with $49.1 billion going to nursing home
care. And the costs are only expected to rise.
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Immigrants Links
Immigration reform trades off with war and other priority issues
Gardner, PhD, RN, Chief of Workforce planning and development, NIHCC, 2007, [Deborah, B., “Immigration and
Health Care Reform: Shared Struggles”,
http://proquest.umi.com.proxy.lib.umich.edu/pqdweb?index=0&did=1381347061&SrchMode=1&sid=1&Fmt=3&V
Inst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1245957029&clientId=17822, June 23, 2009]
As states wrestle with the immigration issues as perceived at the local level and implement state-based health care
initiatives, federal direction is needed. These are complex needs that impact the whole nation not just a few states.
However, with the continuation of the war in Iraq and gas prices increasing, crucial domestic policy remains in third
or fourth place and doomed to legislative inaction. In short, political and fiscal energy are consumed with a costly
and highly debated war.
Immigrant costs are immense now
McManus, President of JBS, March 3, 2008. [John F., “The Battle Against Illegal Immigration”,
http://proquest.umi.com.proxy.lib.umich.edu/pqdweb?index=1&did=1444925291&SrchMode=1&sid=2&Fmt=3&V
Inst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1245957239&clientId=17822, June 23, 2009]
The public is angry because the cost associated with illegal immigrants is immense. Los Angeles County Supervisor
Michael D. Antonovich reported in October 2007: "Illegal immigration continues to have a devastating impact.... In
addition to $220 million for public safety and $400 million for healthcare, the $440 million in welfare allocations
bring the total cost to County taxpayers that exceeds $1 billion a year - this does not include the skyrocketing cost of
education.
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Natives Link
Medicaid’s care for Native Americans contributes millions of dollars to the budget
Renfrew, '07, House of Representatives, Office of Legislative Counsel, Washington, DC, 2006.
[Megan J., “The 100% Federal Medical Assistance Percentage: A Tool for Increasing Federal Funding for Health
Care for American Indians and Alaska Natives”,
http://74.125.95.132/search?q=cache:Q1hamH5_j1EJ:www.columbia.edu/cu/jlsp/pdf/Winter2006/Renfrew.pdf+The
+100%25+Federal+Medical+Assistance+Percentage:+A+Tool+for+Increasing+Federal+Funding+for+Health+Care
+for+American+Indians+and+Alaska+Natives.&cd=1&hl=en&ct=clnk&gl=us&client=firefox-a, June 24, 2009]
Most federal funding for AIAN health care flows through the Indian Health Service (IHS). This funding is vastly
inadequate to meet the needs of AIANs and overcome existing health disparities. In 1976, Congress allowed IHS to
begin billing Medicaid for services provided to AIANs in the Indian Health Care Improvement Act (IHCIA), n4
opening up a new stream of federal funding for IHS programs. Normally, the Federal Medicaid program requires
that states provide dollars to match federal funds for the program. AIAN health care, however, has traditionally been
the responsibility of the federal government. Thus, in the IHCIA, Congress authorized the Centers for Medicare and
Medicaid Services (CMS), n5 the federal agency which administers the Medicaid program, to pay IHS 100% of the
cost of services provided to Medicaid-enrolled AIANs through use of the federal medical assistance percentage
(FMAP), thereby relieving the states of any [*175] financial responsibly for these services. In fiscal year 2005,
Medicaid contributed over $ 470 million to the budget of IHS facilities nationwide under this provision.
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Drug Rehabilitation link
Drug rehabilitation services are expensive
Katel, Bureau chief for Time Magazine. University of New Mexico graduate. June 2, 2006. [Peter, “War on Drugs”,
http://library.cqpress.com.proxy.lib.umich.edu/cqresearcher/cqresrre2006060200, June 24, 2009]
However, the Bush administration is proposing a major increase — from about $10 million to $69 million — in
federal funds for “drug courts,” which cropped up across the country in the 1990s. The courts were set up to keep
drug offenders out of jail by providing a period of court-supervised treatment, during which defendants submit to
periodic drug tests and often are required to get and keep a full-time job. Generally, their charges are dropped if they
pass the drug tests, while defendants who fail the tests are jailed for short periods of time or face standard court
proceedings where they might get longer jail terms. They should quit, he says, because society shouldn't have to
bear the enormous costs of drug abuse. A 2002 ONDCP report estimates that drug abuse costs the nation $180.9
billion a year in lost productivity and spending on law enforcement, prisons and health care.
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Child Care
Childcare social services must be paid for through subsidy programs or by contracts- both
of their costs have grown exponentially
National Center for Children in Poverty 02 (National Center for Children in Poverty- Mailman School of Public
Health Columbia University, “Continuity and Stability,” NCCP, August 02,
http://www.nccp.org/publications/pub_478.html
With the passage of the Act for Better Child Care and the creation of the Child Care and Development Block Grant
(CCDBG) in 1990, the federal role in child care became more visible. With the consolidation of CCDBG and
several other federal child care funding streams into the Child Care and Development Fund (CCDF) in 1996, the
federal effort became more focused. Inclusion of CCDF in the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 formalized the joining of two national goals: supporting family self-sufficiency and
promoting child well-being. This same two-generational focus is seen in the mission of the Child Care Bureau of the
U.S. Department of Health and Human Services: to ensure “child care services that promote healthy child
development and family self-sufficiency.”* Spending on child care subsidies by both the federal government and by
states has increased rapidly since 1996. One study found that, among the states examined, spending on child care
increased by an average of 78 percent between 1997 and 1999.** Most of the dollars are expended through child
care subsidy programs administered directly by the states or local governments, or by contracts with child care
resource and referral agencies. As states have built their child care subsidy programs, conventional wisdom about
how the program operates has emerged. For example: (1) Most families have a copay. (2) Families leave the
program because they no longer meet the income eligibility guidelines. (3) High copays are a major cause for
families leaving the program. (4) The higher the net value of participation the longer parents will participate in the
program. (5) Care by relatives is less stable than that provided in centers and regulated family child care homes. (6)
The program is serving low-income working families as they transition from welfare to work. Despite the clearer
federal focus and increased expenditure, little is known about the child care subsidy program, including the validity
of these commonly-expressed opinions. Up to this point little research has focused on how the child care subsidy
program operates, who is served, and what services are offered.
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School Lunch Links
Improving school lunch programs cost millions.
MPR News 7/11/09 (‘Education Department Awards School Lunch Grants’, Tom Weber for Minnesota Public
Radio News,
http://minnesota.publicradio.org/display/web/2009/06/11/education_department_awards_school_lunch_grants/)
St. Paul, Minn. — Minnesota’s Education Department has awarded grants to more than six dozen schools and
groups so they can buy equipment for their lunch programs. The federal stimulus package, which became law in
February, includes $100 million for schools and other groups in the National School Lunch Program to buy
equipment. Minnesota’s share is $1.27 million. Projects being funded range from a $5,100 salad bar for the Circle
of Life school in White Earth, to a $235,000 ‘cook-n-chill’ system for Minneapolis. Other grants will pay for
commercial dishwashers, ovens, and refrigerators for 77 schools and groups. They’ll have to buy the items first and
get reimbursed later. Other grants will pay for commercial-sized dishwashers, ovens, and refrigerators for 77
schools and groups. They’ll have to buy the items first and get reimbursed later. The stimulus law requires the
grants to go to districts where more than half of the students are on free and reduced lunch, and where the new
equipment would help improve the quality or delivery of school food. Most education stimulus will be awarded
based on pre-set formulas. But these food equipment grants were competitively bid – the first such competitive
funds that Minnesota’s education department has announced.
The School Lunch program costs $12 billion.
New America Foundation 09 (‘Federal School Nutrition Programs’, http://febp.newamerica.net/backgroundanalysis/federal-school-nutrition-programs)
The National School Lunch Program supports student nutrition in over 101,000 schools and residential facilities. It
provides free and reduced priced meals to low-income children before school, during school, after school, and over
the summer. In fiscal year 2008, federal school nutrition programs will underwrite more than five billion meals
served to over 31 million students. Total funding for all nutrition programs sums to more than $12 billion in both
cash and commodity payments. School nutrition programs are one of the largest federal funding streams to schools.
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Education Links
Even more spending is needed for education than the past-higher tuition costs and more
students needing loans
Lips 06 (Daniel Lips-Education Analyst at the Heritage Foundation, “Education Notebook: The Facts on Federal
Education Spending”, Heritage Foundation, 11/9/06, http://www.heritage.org/research/education/ednotes49.cfm)
Sweeping victories in the midterm elections have put Democrats in charge of the 110 th Congress. After twelve years
out of power, what will Democrats seek to accomplish in federal education policy? One common theme in their
recommendations has been to increase spending on both K-12 and postsecondary education. The Democratic
Party’s 2004 National Platform criticized President Bush for “breaking his word” on No Child Left Behind and
“providing schools $27 billion less than he promised, literally leaving millions of children behind.” The platform
also criticized the Bush administration for not providing enough federal funding for higher education and student
loans, charging that “President Bush tried to charge more for student loans and eliminate Pell Grants for 84,000
students.” Actually, federal education spending has grown dramatically over the past six years under President Bush
and the Republican Congress. But more importantly, whether it’s Republicans or Democrats increasing federal
funding, more federal dollars have not improved American education in recent decades. Consider K-12 education
spending. Annual U.S. Department of Education spending on elementary and secondary education has increased
from $27.3 billion in 2001 to $38 billion in 2006, up by nearly 40 percent. According to the department, annual
spending on the Title I program to assist disadvantaged children grew by 45 percent between 2001 and 2006. In
2007, the department will spend 59 percent more on special education programs than it did in 2001. Unfortunately,
there’s little reason to believe even these dramatic funding increases will lead to improvements in student learning in
American schools. Since the early 1970s, inflation-adjusted federal spending per pupil has doubled. Over that
period, student performance has not markedly improved, according to the long-term National Assessment of
Educational Progress (NAEP), which is designed to measure historical trends. Under a Republican-controlled
Congress, federal spending on higher education has increased almost as dramatically as K-12 spending over the past
six years. For example, annual Department of Education spending on federal Pell Grants grew from $8.7 billion in
2001 to $13 billion in 2006, nearly 50 percent growth. The federal government spends considerably more on higher
education today than it did during the Clinton administration. According to the College Board, federal funding for
higher education in 2004-2005 totaled $90 billion, a real increase of 103 percent over ten years. An increasing
number of students receive federal subsidies for higher education. For example, 5.3 million students received
federal Pell Grants in 2005, an increase of 44 percent over ten years. In all, in 2006 more than 10 million Americans
will receive various federal subsidies for higher education. Unfortunately, as with K-12 spending, there’s little
evidence that federal spending on higher education is achieving its objective. Quite simply, college tuition is
becoming more expensive each year. According to the College Board, the total cost of tuition and fees at four-year
private and public colleges increased by 5.9 percent and 7.1 percent, respectively, during the 2005-06 school
year. According to economist Richard Vedder, college tuition costs increased by 295 percent between 1982 and
2003, a growth rate higher than health care costs (195 percent), housing (84 percent), and all items (83 percent). In
his book, Going Broke By Degree: Why College Costs Too Much, Dr. Vedder argues that increased federal
spending on higher education has contributed to rising tuition costs. In other words, federal subsidies are not
making higher education more affordable because colleges and universities simply consume this additional source of
revenue.
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House Deconcentrating
Housing Deconcentration requires the government to pay subsidies for families
Poverty Race and Research Action Council 05 (Poverty Race and Research Action Council-Civil Rights Policy
Organization, “Protecting Housing mobility in the Section 8 Housing Voucher Program,”PRRAC 2/11/05
http://www.prrac.org/full_text.php?text_id=1014&item_id=9337&newsletter_id=0&header=Housing)
The effect of the new funding system on housing mobility
The most damaging recent change in the program is the shift from a budgeting system that reimbursed PHAs for the
total number of vouchers in use to a new funding system, beginning in 2004, that generally limit PHAs to a fixed
sum of funds for the year, with no right to receive extra funds when costs increase. This funding scheme creates a
financial conflict on the local level between the number and the quality of housing placements In other words, since
apartments in segregated, higher poverty neighborhoods are more likely to have lower rents, an agency will face
pressure to serve more families by approving tenancies in those areas rather than paying the higher cost of subsidies
for families to move to housing located in better areas. This type of conflict is bad for fair housing, deprives poor
families of choice, and it will lead inexorably to more segregation.
Targeting subsidy costs - HUD Approval of Exception Payment Standards, Fair Market Rents, and Rent
Reasonableness The current system, permitting exception payment standards in higher cost areas, was intended to
allow PHAs to pay higher rents in selected communities when warranted, upon careful documentation to HUD. This
system was fair and efficient when properly administered, but in order for it to work in high cost areas HUD has to
be willing to approve Exception Payment Standards. Unfortunately, HUD has effectively suspended this option
since the fall of 2003. HUD should immediately lift the suspension in approval of exception payment standards and
advise local PHAs that exception payment standards will again be considered. Ideally HUD would factor any
additional subsidy cost into the PHA's reimbursement formula so that requesting exceptions would not mean that the
PHA would serve fewer households. Rather than penalize PHAs for helping families to become more self-sufficient,
HUD should provide them additional incentives as had previously been provided for “hard to house” families.
In fact, at the outset HUD could reduce the need for Exception Payment Standards approvals -- and make the
process easier for PHAs -- by setting the FMRs on which the Payment Standards are based at levels that reflect the
differences in rents between central city vs. suburban areas, rather than setting them for an entire region. Doing so
could cut costs significantly, without jeopardizing mobility.
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Public Transportation Links
Public Transportation projects cost $1.6 trillion- transit boom, earmarks and pork
Beck 08 (Graham Beck, “Federal Transportation Spending: Pork or Priority,” Gotham Gazette, October 2008,
http://www.gothamgazette.com/article/transportation/20081008/16/2670)
Across the country, evidence of the need to invest in America's transportation infrastructure abounds. From the
tragic collapse of the I-35 bridge in Minneapolis last year, to the plans for a new Tappan Zee Bridge in New York,
major road projects need serious attention and federal support. The American Society of Civil Engineers has
reported that the nation's infrastructure deserves an overall grade of D and set the price tag for repair at $1.6 trillion.
America's public transit system needs support as well. Gas prices are high, purse strings cinched and environmental
consciousness as broad as ever. Accordingly, more American's are using transit and regional rail along with biking
and walking. The American Public Transportation Association found that Americans took 88 million more transit
trips in the first three months of this year than in the same time period last year. In New York City, overall public
transit use rose by between 1 percent and 13 percent in the first quarter of this year compared to the first quarter of
last year.
In short, both New York City and the United States are experiencing a transit boom and a roadway bust. Dealing
with both will take thoughtful planning and serious commitment from city, state and federal government. It will also
take a president committed to addressing the myriad issues facing the nation's ailing highways and over-crowded
buses and trains in new and creative ways.
So what can New York commuters expect from the two major party presidential candidates? Sen. Barack Obama
has often spoken of the need for better transit funding, smarter development and more infrastructure investment by
the federal government, while Sen. John McCain has long preached the gospel of fiscal responsibility and a handsoff role for Washington. Both men have made statements about their inclinations and plans, and both have
transportation-related legislative records that indicate what their administration might mean for the nation in the next
four years.
The Buck Stops Where?
A key test for the new president could come with the reauthorization of the next federal transportation bill in 2009.
While many critics have problems with this omnibus approach to transportation spending, and the planning that
results, for about two decades the bill and its predecessors have played a key role in shaping the transportation
landscape in the nation and New York City. The current version of the bill, dubbed SAFETEA-LU, which was
passed in 2005 and is active through 2009, is a $286.4 billion piece of legislation that primarily shapes
transportation planning through funding specific projects in specific areas. Although generally considered a highway
bill -- about 85 percent of it goes to roads -- it also includes a good deal of start-up transit funding and even some
money for non-motorized transportation (bicycles and pedestrians), although that amount is less than 1 percent of
the total. Critics claim that it is loaded with pork projects and earmarks for certain key legislative districts that have
been traded for "yes" votes. McCain, who, judging by his campaign Website, has never met an earmark he liked,
was one of only four senators to vote against SAFETEA-LU. His official statement on the legislation read: "This
monstrosity of a conference report which costs an astounding $286.4 billion is both terrifying in its fiscal
consequences and disappointing for the lack of fiscal discipline it represents." Certainly, SAFETEA-LU is a huge
spending bill filled with earmarks and potential pork barrel projects, but pork is often in the eye of the beholder.
SAFETEA-LU money funded a number New York City projects from better buses and subways and bike lanes to
the Safe Routes to School program. There is no way of knowing what McCain thought of any of those particular
items -- his Website says little to nothing about specific transportation projects -- but his emphasis on fiscal
consequences and fiscal discipline would seem to imply that if he were president, a do-more-with-less approach to
transportation funding, with private companies taking up more of the responsibility, would be the model.
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Job Training Links
Multiple Job Training Programs Including Pell Grants Require Significant Funding
CCTIMES 09 (CCTimes-biweekly newspaper of the American Association of Community Colleges, “Job Training
Grants Top AACC’s Wish List,” 5/18/2009,
http://www.communitycollegetimes.com/article.cfm?TopicId=84&ArticleId=1723)
A top funding priority for the American Association of Community Colleges (AACC) is doubling funding for the
federal Community-Based Job Training Grants (CBJTG) program, which funds mainly community college
partnerships to train workers for high-demand, high-growth industries. As House and Senate appropriations
subcommittees prepare to release their funding proposals for fiscal year (FY) 2010, AACC has set its appropriations
wish list, which would increase funding for CBJTG to $250 million. The association has advocated for that level of
funding since the program started in 2005. CBJTG was initially proposed to receive $250 million annually. In its FY
2010 budget proposal, the Obama administration wants to modify the CBJTG program and rename it the Career
Pathways Innovation Fund. Although full details are not yet available, it is expected that the new program will focus
on supporting community college training capacity and programs, but the emphasis will be on funding career
pathway programs. "Community colleges badly need this infusion of resources to address the local and national
workforce training needs," AACC said in a memo to its member colleges. AACC would also like to see $100
million appropriated for the Strengthening Institutions Program (Title III-A of the Higher Education Act), which
provides support to institutions that serve high proportions of low-income and historically under-represented
populations. To allow community colleges that use these federal funds to continue to provide educational
opportunities for thousands of students and to prepare the future workforce, AACC wants Congress to increase
funding for the program by $20 million. The association would also like to see the Pell Grant maximum increased to
$5,550, mirroring President Barack Obama’s request. The program serves about 7 million students annually, 70
percent of whom come from families with annual incomes of $20,000 or less. Pell Grants enable more than 2 million
community college students to enroll each year by helping with tuition, books and equipment and living expenses.
AACC also wants lawmakers to appropriate $1.4 billion for Carl D. Perkins Career and Technical Education Act
programs, which provide critical workforce development funding. Community colleges use the grants for many
purposes, including developing innovative occupational education curricula, helping students meet academic and
technical standards, training first responders, purchasing equipment, supporting professional development and
strengthening links between institutions and businesses.
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Elderly Care
Elderly care would cost billions plus management & abuse costs
FERRARA 90 associate professor at the George Mason University Law School and a senior fellow of the
Cato Institute
[Peter J., “Long-Term Care: Why a New Entitlement Program Would Be Wrong,” December 13, 1990, Policy
Analysis no. 144]
A new nursing home and home health care entitlement program would cost $60 billion to $80 billion a
year in net new federal spending, a massive burden that taxpayers will not support. Such a program
would cause substantial unnecessary utilization, produce massive displacement of private care givers,
eliminate incentives to control costs, send prices for long-term care soaring, and expose the
government to uncontrollable abuse. Adopting such a huge new entitlement obligation to the elderly in
the face of the pending retirement of the baby-boom generation, and the immense short- and long-term
fiscal problems that already exist, would be foolhardy.
Increasing elderly costs would make medicare & social security problems worse
FERRARA 90 associate professor at the George Mason University Law School and a senior fellow of the
Cato Institute
[Peter J., “Long-Term Care: Why a New Entitlement Program Would Be Wrong,” December 13, 1990, Policy
Analysis no. 144]
Adopting such a huge new entitlement obligation to the elderly in the face of already large budget
deficits, and the pending retirement of the baby-boom generation, would be foolhardy. Medicare itself
is already projected to run deeply into the red, requiring increases in the program's payroll tax rates of as
much as 475 percent by the time today's young workers retire, according to the latest official government
reports.(42) The required Medicare payroll tax rates alone could be higher by then than payroll tax rates for
all of Social Security are today. We need to focus on bringing the fiscal obligations we already have for
Medicare under manageable control instead of looking at new unmanageable obligations.
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Link – stand alone bills
Here’s another link - the stand alone nature of the plan creates a dangerous precedent
crushing fiscal restraint – despite the enormous current spending bills
GRAMS 95 Senator – Minnessota
[Rod, Congressional Press Releases, 3/20/95, lexis]
Too often, these extra "morsels" are million-dollar pieces of pork, dumped into the stew pot by a
member of congress eager to please a special interest group back home. But that favor for a few comes at
the expense of everyone else. Last year's package of disaster assistance following the California
earthquake quickly became a garbage bill of the very worst kind. By the time the legislation passed, Mr.
President, it included not only $ 10 billion in actual emergency relief, but an extra $ 10 million to design
a new Amtrak station in New York City, $ 20 million to hire employees for the FBI's fingerprint
laboratory in West Virginia, $ 1.4 million to fight a potato fungus in Maine, and $ 1 million for sugar cane
growers in Hawaii. As stand-alone legislation, particularly when compared against the rest of the
monstrous federal budget, individual park projects may not appear so ominous. Collectively,
however, they account for billions of dollars in federal spending every year. And by putting the
legislative priorities of a few ahead of the fiscal priorities of an entire nation, they set a dangerous
precedent.
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Link – even small spending
Even small things ruin fiscal viability
The Post and Courier, 2004 ( November 28, Lexis)
Yet the revised bill's pork-packed spending commitments apparently will remain the same. And though $350,000 for music education programs at the Rock and
Roll Hall of Fame is less than 0.0001 percent of the current federal deficit, such unwarranted spending can have a contagious, recklessspending effect. The GOP has long benefited from a general public perception that it is the more frugal of the two major parties. Even this
year, Democrats, despite occasional calls for fiscal discipline, often charged not that Republicans were spending too much, but that they were spending -- and taxing -- too
little. The voters evidently rejected that criticism.But if the GOP is to build on its Election Day success and restore any meaningful claim to being the party
of frugality, and more importantly, if the nation is to maintain its fiscal viability, those now in charge in Washington must spend our money
more prudently
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Deficit Spending
Deficit spending will cause a fast crash
WILMINGTON NEWS JOURNAL 5 - 19 - 09
OUR VIEW: Deficit spending must be addressed,
http://www.wnewsj.com/main.asp?SectionID=42&SubSectionID=201&ArticleID=176755
The federal government is now borrowing almost 50 cents for every dollar it spends. That is an
absolutely staggering budgetary situation which raises concerns not only for future generations which
we are saddling with this debt, but also for the health of the nation’s economy in the not-toodistant future. Due to the economy performing worse than hoped, the White House reported last week
that the deficit for the current budget year will rise by $89 billion, to a total exceeding $1.8 trillion. That’s
approximately four times the record set last year. Annual deficits, the White House said, would never fall
below $500 billion and would total $7.1 trillion over 2010-2019. Even those dismal figures rely on
economic projections that are significantly more optimistic than those forecast by private sector
economists and the Congressional Budget Office. Add those trillions to the $11 trillion national debt
President Obama inherited. The White House says that the unprecedented red ink is flowing because of
the recession, the Wall Street bailout, the cost of the economic stimulus bill, and the structural imbalance
between what the government spends and what it receives. Whatever the causes, deficit spending
at this pace is not sustainable. Even President Obama acknowledged this in recent days. The budget
plot thickens when we look at Social Security and Medicare. The trustees of the Social Security trust fund
report that the fund would start paying out more than it collects in taxes in 2017. At this pace, and without
raising revenue or changing benefits, the trust fund will be depleted in 2041. Medicare’s status is even more
dire. The Medicare trust fund will start paying more in benefits than it collects within one year, and the fund
will be depleted by 2019.
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Perception Links
Increased government spending will cause inflation—perception-based
Harrop 9 [Froma Harrop is a member of The Journal's editorial board and a syndicated columnist, “Deficit Worry is the Greenest Shoot,” June
16 http://www.realclearpolitics.com/articles/2009/06/16/deficit_worry_is_the_greenest_shoot_97005.html]
Never mind firmer retail sales, rising stock prices and moderating job losses. The
greenest shoot is Americans' changing
economic fixation. There's less panic over collapsing banks, home foreclosures and the prospect of another Great Depression.
Attention has moved to budget deficits and the resulting federal debt. These are worries of a more stable
time, when people had the luxury of looking at the long-term.
Suddenly there's talk of hiking taxes and curbing federal spending, which you shouldn't do when the economy is flat
on its back. These actions require discipline and sacrifice. They're no fun at all but preferable to a trip to the abyss.
Deficits are a disease we can diagnose, and they have a cure we can understand. We know how bad the
problem is -- unlike in the dark recent past, when no one could fully assess the threat of the mysterious derivatives, the so-called financial
weapons of mass destruction.
That said, while
budget deficits are a more ordinary concern, today's projected federal imbalances
are not ordinary deficits. This year's expected deficit of $1.8 trillion is fueled by the deep recession.
The bailouts, economic stimuli, social-safety-net spending and reduced tax revenues are presumably temporary. But the nonpartisan
everyone's
getting nervous about rising interest rates and how they will bloat the government's borrowing
costs. These numbers are huge. They can't continue. But note that new programs, if they're paid for, don't add to
Congressional Budget Office projects a 2019 deficit of $1.2 trillion, even assuming respectable economic growth. And
deficits.
Loss of confidence sparks a dollar sell-off crushing the economy
FINANCIAL TIMES 5 - 22 - 09
http://www.ft.com/cms/s/0/bdd23cb0-4639-11de-803f-00144feabdc0.html
Congressional Budget Office estimates suggest that under administration policies the US will have a
medium-term structural deficit (the deficit when the economy is operating at full potential) of roughly 5
per cent of gross domestic product. “If we are winding up with deficits that are in the 5 per cent of GDP
range we will change policies,” a senior administration official told the FT. “We have said that 5 per cent is
unsustainable.” Another administration official said the biggest threat to recovery was the risk that
the bond market might lose confidence in US public finances, pushing up bond yields and
throttling growth. That would present the Federal Reserve with the choice of standing by or creating
more money to buy bonds to push private borrowing rates back down – a move that could spook
foreign creditors and fuel a sell-off in the dollar. The yield on 10-year Treasuries has risen 74 basis
points to 3.15 per cent since the start of the year, in spite of Fed buying. Meanwhile, the dollar is close to its
lows for 2009. Analysts said recovery hopes naturally led to higher Treasury yields and a weaker dollar,
but movements likely reflected concern about US finances as well. “It is to be expected that as we come
out of the downturn bond yields will go up,” Mr Orszag said. But he added “we have said for a long time
under current policies the nation is on an unsustainable fiscal path and therefore something has to change”.
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Speculation is low now, but it could easily increase. The U.S. budget deficit is the key factor
for dollar speculators
Daily fx- economic news website- July 11 2009- US Dollar Looking For a Catalyst to Break Congestionhttp://www.dailyfx.com/story/currency/eur_fundamentals/US_Dollar_Looking_For_a_1247272881119.html
Over the past month, risk appetite has leveled off and is even threatening to retrace the rally in
optimism that began back in March. There are two considerations here for those trading the dollar.
First, determine what is will drive sentiment; and then determine how the greenback will respond to
the shift. It shouldn’t come as a surprise that the currency’s reaction will depend on what is moving the
market. Should the global financial markets be thrown into panic, the dollar will take on the title of safe
haven. On the other end of the scale, if there is a broad recovery in investor sentiment, it will be a more
discriminating scale. Looking out over the coming week, there are few critical events scheduled – but this
sort of thing usual comes out of the blue. More likely, the market’s bearing will feed off bigger trends. Carry
over from the G8 meeting over the second half of this past week has increased the rivalry to be the first
country to see positive growth and financial stability. In its comments, the group suggested there were
early signs of economic “stabilization,” yet there were still hurdles and the commitment would remain
with “fiscal sustainability.” This has been the motto for a few months now which only
further breeds speculation. Should the calls to recapitalize “viable” banks and deal with distressed
debt be taken seriously, the US is already ahead of the curve. However, beyond the short-term, America’s
budget deficit dwarfs most of its counterparts; and policy officials remained staunchly opposed to moving
on to the next step for a recovery – the government’s graceful exit from the financial markets.
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2NC Inflation Impact—Economic Collapse (Irreversible)
Inflation causes irreversible economic collapse
Filger 5/25/09 [Sheldon Filger, Writer and founder of GlobalEconomicCrisis.com, “U.S. Economy Risks Dire Prospect of Hyperinflation,”
Huffington Post, http://www.huffingtonpost.com/sheldon-filger/us-economy-risks-dire-pro_b_207079.html]
China, the major purchaser of Treasuries and holder of $1 trillion of U.S. government debt, is already on record as expressing
concern for the integrity of its American investments, and has begun actively exploring alternatives
to the U.S. dollar as the primary global reserve currency. These moves by China are not based on
fears of expropriation of its U.S. assets, but focuses on the specter of hyperinflation destroying
much of the value of assets denominated in U.S. dollars. No doubt China's economic experts are well aware of the growing
number of economists who are convinced that the U.S. will be unable to service its rapidly expanding debt burden without significant inflation.
Inflation in monetary terms means the erosion of the intrinsic value of the American dollar.
What is most frightening about the policy moves being enacted by the Fed and Treasury is that their actions may not be a reckless gamble after all.
They may have come to the conclusion that only hyperinflation will enable the United Sates to avoid national insolvency. In effect, they may be
pursuing the exact opposite course undertaken by Paul Volcker in the early 1980's. If that is their prescription for the dire economic crisis confronting
the U.S., then one must conclude that Ben Bernanke, Timothy Geithner and Larry Summers have learned nothing from history. Once
the
spigot of hyperinflation is tuned on, it becomes a cascading torrent that is almost impossible to
switch off, and which in its wake inflicts inconceivable levels of economic, political and social
devastation . Before it is too late, President Obama should put the brakes on his economic team's
dangerous gamble with the haunting specter of hyperinflation. If he fails to act in time, a hellish
prospect may be his economic and political legacy.
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Econ Collapse impacts
Economic collapse will cause global wars
FORBES 10 – 29 – 08 Presidential Candidate, Editor in Chief of Forbes Magazine
(Steve, 1996, CNS News, “Steve Forbes Predicts Six Months of Recession”,
http://www.cnsnews.com/public/content/article.aspx?RsrcID=38291)
“Well, this is a critical thing: the geopolitical fallout. It’s not just our own economy. It’s not just facing the
prospect of more unemployment and people losing their businesses, as shattering though that is. It has
geopolitical consequences. It gave windfall revenues, weakening the dollar. But higher oil prices gave hundreds
of billons to some of the worst characters in the world - the lunatic running Venezuela, the murderous mullahs
running Iran. Russia began to act very belligerent in foreign policy. So it had fall out from that. And, at the same
time, it weakened the United States’ economy, which is not a good thing for the world. “And you can look at the
past. Look at what happened in the 1930s, went through the Great Depression and the hideous things that
resulted from that. The Nazis never would have come to power in Germany if it hadn’t been for the
Depression, which led to a second World War. In the 1970s, when we had this wild inflation, America looked
weak, and we withdrew from the world, and Communists took over in Nicaragua. The mullahs took over in
Iran, and so you can see the same pattern is starting again. “Thankfully, in 1981, Ronald Reagan took office and
made abrupt, enormous changes both on the economy, massive tax cuts and other measures – rebuilding our
shattered military. And guess what we became once again? The most vibrant economy in the world, and we
won the Cold War. That’s what we have to look to, a Reaganesque approach. How do we get out of this and
go to new levels of strength.”
Economic collapse will cause extinction
BEARDEN 00 Director of Association of Distinguished American Scientists
[T. E., “The Unnecessary Energy Crisis: How to Solve It Quickly,” Space Energy Access Systems,
http://www.seaspower.com/EnergyCrisis-Bearden.htm]
History bears out that desperate nations take desperate actions. Prior to the final economic collapse, the
stress on nations will have increased the intensity and number of their conflicts, to the point where the
arsenals of weapons of mass destruction (WMD) now possessed by some 25 nations, are almost
certain to be released. As an example, suppose a starving North Korea launches nuclear weapons
upon Japan and South Korea, including U.S. forces there, in a spasmodic suicidal response. Or suppose
a desperate China — whose long-range nuclear missiles (some) can reach the United States — attacks
Taiwan. In addition to immediate responses, the mutual treaties involved in such scenarios will quickly
draw other nations into the conflict, escalating it significantly. Strategic nuclear studies have shown for
decades that, under such extreme stress conditions, once a few nukes are launched, adversaries and
potential adversaries are then compelled to launch on perception of preparations by one's adversary.
The real legacy of the MAD concept is this side of the MAD coin that is almost never discussed. Without
effective defense, the only chance a nation has to survive at all is to launch immediate full-bore preemptive strikes and try to take out its perceived foes as rapidly and massively as possible. As the studies
showed, rapid escalation to full WMD exchange occurs. Today, a great percent of the WMD arsenals that
will be unleashed, are already on site within the United States itself. The resulting great
Armageddon will destroy civilization as we know it, and perhaps most of the biosphere, at least for
many decades.
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Economy Impacts – Wars
Further economic decline causes civil conflict and war all over the planet
KLARE 2 – 25 – 09 Prof. Peace and World Security Studies @ Hampshire College
(Michael, Five College, Pin Hills News, “Economic Crash Will Fuel Social Unrest”,
http://thepinehillsnews.com/wp/2009/02/25/economic-crash-will-fuel-social-unrest/)
The global economic meltdown has already caused bank failures, bankruptcies, plant closings, and
foreclosures and will, in the coming year, leave many tens of millions unemployed across the planet. But
another perilous consequence of the crash of 2008 has only recently made its appearance: increased civil unrest and ethnic strife. Someday, perhaps,
war may follow. As people lose confidence in the ability of markets and governments to solve the global
crisis, they are likely to erupt into violent protests or to assault others they deem responsible for their plight, including government
officials, plant managers, landlords, immigrants, and ethnic minorities. (The list could, in the future, prove long and unnerving.) If the present economic disaster turns
into what President Obama has referred to as a “lost decade,” the result could be a global landscape filled with economically-fueled upheavals. Indeed, if you want to
be grimly impressed, hang a world map on your wall and start inserting red pins where violent episodes have already occurred. Athens (Greece), Longnan (China),
Port-au-Prince (Haiti), Riga (Latvia), Santa Cruz (Bolivia), Sofia (Bulgaria), Vilnius (Lithuania), and Vladivostok (Russia) would be a start. Many other cities from
Reykjavik, Paris, Rome, and Zaragoza to Moscow and Dublin have witnessed huge protests over rising unemployment and falling wages that remained orderly thanks
in part to the presence of vast numbers of riot police. If you inserted orange pins at these locations — none as yet in the United States — your map would already look
aflame with activity. And if you’re a gambling man or woman, it’s a safe bet that this map will soon be far better populated with red and orange pins. For the
most part, such upheavals, even when violent, are likely to remain localized in nature, and disorganized enough that
government forces will be able to bring them under control within days or weeks, even if — as with Athens for six days last December — urban paralysis sets in due
It is entirely possible, however, that, as the economic
crisis worsens, some of these incidents will metastasize into far more intense and long-lasting events:
armed rebellions, military takeovers, civil conflicts, even economically fueled wars between states. Every
outbreak of violence has its own distinctive origins and characteristics. All, however, are driven by a
similar combination of anxiety about the future and lack of confidence in the ability of established
institutions to deal with the problems at hand. And just as the economic crisis has proven global in ways not seen
before, so local incidents — especially given the almost instantaneous nature of modern communications — have a potential to spark others
in far-off places, linked only in a virtual sense. A Global Pandemic of Economically Driven Violence The riots that erupted in the spring of 2008 in
to rioting, tear gas, and police cordons. That, at least, has been the case so far.
response to rising food prices suggested the speed with which economically-related violence can spread. It is unlikely that Western news sources captured all such
incidents, but among those recorded in the New York Times and the Wall Street Journal were riots in Cameroon, Egypt, Ethiopia, Haiti, India, Indonesia, Ivory Coast,
and Senegal. In Haiti, for example, thousands of protesters stormed the presidential palace in Port-au-Prince and demanded food handouts, only to be repelled by
government troops and UN peacekeepers. Other countries, including Pakistan and Thailand, quickly sought to deter such assaults by deploying troops at farms and
warehouses throughout the country. The riots only abated at summer’s end when falling energy costs brought food prices crashing down as well. (The cost of food is
now closely tied to the price of oil and natural gas because petrochemicals are so widely and heavily used in the cultivation of grains.) Ominously, however, this is
sure to prove but a temporary respite, given the epic droughts now gripping breadbasket regions of the United States, Argentina, Australia, China, the Middle East,
and Africa. Look for the prices of wheat, soybeans, and possibly rice to rise in the coming months — just when billions of people in the developing world are sure to
see their already marginal incomes plunging due to the global economic collapse. Food riots were but one form of economic violence that made its bloody appearance
In
India, for example, violent protests threatened stability in many key areas. Although usually described as ethnic, religious, or
in 2008. As economic conditions worsened, protests against rising unemployment, government ineptitude, and the unaddressed needs of the poor erupted as well.
caste disputes, these outbursts were typically driven by economic anxiety and a pervasive feeling that someone else’s group was faring better than yours — and at
your expense. In April, for example, six days of intense rioting in Indian-controlled Kashmir were largely blamed on religious animosity between the majority
Muslim population and the Hindu-dominated Indian government; equally important, however, was a deep resentment over what many Kashmiri Muslims experienced
as discrimination in jobs, housing, and land use. Then, in May, thousands of nomadic shepherds known as Gujjars shut down roads and trains leading to the city of
Agra, home of the Taj Mahal, in a drive to be awarded special economic rights; more than 30 people were killed when the police fired into crowds. In October,
economically-related violence erupted in Assam in the country’s far northeast, where impoverished locals are resisting an influx of even poorer, mostly illegal
immigrants from nearby Bangladesh. Economically-driven clashes also erupted across much of eastern China in 2008.
Such events, labeled “mass incidents” by Chinese authorities, usually involve protests by workers over sudden plant shutdowns, lost pay, or illegal land seizures. More
often than not, protestors demanded compensation from company managers or government authorities, only to be greeted by club-wielding police. Needless to say,
the leaders of China’s Communist Party have been reluctant to acknowledge such incidents. This January, however, the magazine Liaowang (Outlook Weekly)
reported that layoffs and wage disputes had triggered a sharp increase in such “mass incidents,” particularly along the country’s eastern seaboard, where much of its
manufacturing capacity is located. By December, the epicenter of such sporadic incidents of violence had moved from the developing world to Western Europe and
the former Soviet Union. Here, the protests have largely been driven by fears of prolonged unemployment, disgust at government malfeasance and ineptitude, and a
sense that “the system,” however defined, is incapable of satisfying the future aspirations of large groups of citizens. One of the earliest of this new wave of upheavals
occurred in Athens, Greece, on December 6, 2008, after police shot and killed a 15-year-old schoolboy during an altercation in a crowded downtown neighborhood.
As news of the killing spread throughout the city, hundreds of students and young people surged into the city center and engaged in pitched battles with riot police,
throwing stones and firebombs. Although government officials later apologized for the killing and charged the police officer involved with manslaughter, riots broke
out repeatedly in the following days in Athens and other Greek cities. Angry youths attacked the police — widely viewed as agents of the establishment — as well as
luxury shops and hotels, some of which were set on fire. By one estimate, the six days of riots caused $1.3 billion in damage to businesses at the height of the
Christmas shopping season. Russia also experienced a spate of violent protests in December, triggered by the imposition of high tariffs
on imported automobiles. Instituted by Prime Minister Vladimir Putin to protect an endangered domestic auto industry (whose sales were expected to shrink by up to
50% in 2009), the tariffs were a blow to merchants in the Far Eastern port of Vladivostok who benefited from a nationwide commerce in used Japanese vehicles.
When local police refused to crack down on anti-tariff protests, the authorities were evidently worried enough to fly in units of special forces from Moscow, 3,700
miles away. In January, incidents of this sort seemed to be spreading through Eastern Europe. Between January 13th and 16th, anti-government protests involving
violent clashes with the police erupted in the Latvian capital of Riga, the Bulgarian capital of Sofia, and the Lithuanian capital of Vilnius. It is already essentially
impossible to keep track of all such episodes, suggesting that we are on the verge of a global pandemic of economically driven violence. A Perfect Recipe for
Instability While most such incidents are triggered by an immediate event — a tariff, the closure of local factory, the announcement of government austerity measures
— there are systemic factors at work as well. While economists now agree that we are in the midst of a recession deeper than any since the Great Depression of the
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1930s, they generally assume that this downturn — like all others since World War II — will be followed in a year, or two, or three, by the beginning of a typical
recovery. There are good reasons to suspect that this might not be the case — that poorer countries (along with many people in the richer countries) will have to wait
far longer for such a recovery, or may see none at all. Even in the United States, 54% of Americans now believe that “the worst” is “yet to come” and only 7% that the
Whether in the
U.S., Russia, China, or Bangladesh, it is this underlying anxiety — this suspicion that things are far worse
than just about anyone is saying — which is helping to fuel the global epidemic of violence. The World Bank’s
economy has “turned the corner,” according to a recent Ipsos/McClatchy poll; fully a quarter think the crisis will last more than four years.
most recent status report, Global Economic Prospects 2009, fulfills those anxieties in two ways. It refuses to state the worst, even while managing to hint, in terms too
clear to be ignored, at the prospect of a long-term, or even permanent, decline in economic conditions for many in the world. Nominally upbeat — as are so many
media pundits — regarding the likelihood of an economic recovery in the not-too-distant future, the report remains full of warnings about the potential for lasting
damage in the developing world if things don’t go exactly right. Two worries, in particular, dominate Global Economic Prospects 2009: that banks and corporations
in the wealthier countries will cease making investments in the developing world, choking off whatever growth possibilities remain; and that food costs will rise
uncomfortably, while the use of farmlands for increased biofuels production will result in diminished food availability to hundreds of millions. Despite its Pollyannaish passages on an economic rebound, the report does not mince words when discussing what the almost certain coming decline in First World investment in Third
“Should credit markets fail to respond to the robust policy interventions taken so far,
the consequences for developing countries could be very serious. Such a scenario would be characterized
by… substantial disruption and turmoil, including bank failures and currency crises, in a wide range of developing countries. Sharply negative
World countries would mean:
growth in a number of developing countries and all of the attendant repercussions, including increased poverty and unemployment, would be inevitable.” In the fall of
2008, when the report was written, this was considered a “worst-case scenario.” Since then, the situation has obviously worsened radically, with financial analysts
reporting a virtual freeze in worldwide investment. Equally troubling, newly industrialized countries that rely on exporting manufactured goods to richer countries for
much of their national income have reported stomach-wrenching plunges in sales, producing massive plant closings and layoffs. The World Bank’s 2008 survey also
contains troubling data about the future availability of food. Although insisting that the planet is capable of producing enough foodstuffs to meet the needs of a
growing world population, its analysts were far less confident that sufficient food would be available at prices people could afford, especially once hydrocarbon prices
begin to rise again. With ever more farmland being set aside for biofuels production and efforts to increase crop yields through the use of “miracle seeds” losing
steam, the Bank’s analysts balanced their generally hopeful outlook with a caveat: “If biofuels-related demand for crops is much stronger or productivity performance
disappoints, future food supplies may be much more expensive than in the past.” Combine these two World Bank findings — zero economic growth in
the developing world and rising food prices — and you have a perfect recipe for unrelenting civil unrest and violence. The eruptions seen in 2008 and early 2009 will
then be mere harbingers of a grim future in which, in a given week, any number of cities reel from riots and civil disturbances which could spread like multiple
brushfires in a drought. Mapping a World at the Brink Survey the present world, and it’s all too easy to spot a plethora of potential sites for such multiple eruptions
— or far worse. Take China. So far, the authorities have managed to control individual “mass incidents,” preventing them from coalescing into something larger. But
in a country with a more than two-thousand-year history of vast millenarian uprisings, the risk of such escalation has to be on the minds of every Chinese leader. On
February 2nd, a top Chinese Party official, Chen Xiwen, announced that, in the last few months of 2008 alone, a staggering 20 million migrant workers, who left rural
areas for the country’s booming cities in recent years, had lost their jobs. Worse yet, they had little prospect of regaining them in 2009. If many of these workers return
to the countryside, they may find nothing there either, not even land to work. Under such circumstances, and with further millions likely to be shut out of coastal
factories in the coming year, the prospect of mass unrest is high. No wonder the government announced a $585 billion stimulus plan aimed at generating rural
employment and, at the same time, called on security forces to exercise discipline and restraint when dealing with protesters. Many analysts now believe that, as
exports continue to dry up, rising unemployment could lead to nationwide strikes and protests that might overwhelm ordinary police capabilities and require full-scale
intervention by the military (as occurred in Beijing during the Tiananmen Square demonstrations of 1989). Or take many of the Third World petro-states that
experienced heady boosts in income when oil prices were high, allowing governments to buy off dissident groups or finance powerful internal security forces. With oil
prices plunging from $147 per barrel of crude oil to less than $40 dollars, such countries, from Angola to shaky Iraq, now face severe instability. Nigeria is a typical
case in point: When oil prices were high, the central government in Abuja raked in billions every year, enough to enrich elites in key parts of the country and subsidize
a large military establishment; now that prices are low, the government will have a hard time satisfying all these previously well-fed competing obligations, which
means the risk of internal disequilibrium will escalate. An insurgency in the oil-producing Niger Delta region, fueled by popular discontent with the failure of oil
wealth to trickle down from the capital, is already gaining momentum and is likely to grow stronger as government revenues shrivel; other regions, equally
disadvantaged by national revenue-sharing policies, will be open to disruptions of all sorts, including heightened levels of internecine warfare. Bolivia is another
energy producer that seems poised at the brink of an escalation in economic violence. One of the poorest countries in the Western Hemisphere, it harbors substantial
oil and natural gas reserves in its eastern, lowland regions. A majority of the population — many of Indian descent — supports President Evo Morales, who seeks to
exercise strong state control over the reserves and use the proceeds to uplift the nation’s poor. But a majority of those in the eastern part of the country, largely
controlled by a European-descended elite, resent central government interference and seek to control the reserves themselves. Their efforts to achieve greater
autonomy have led to repeated clashes with government troops and, in deteriorating times, could set the stage for a full-scale civil war. Given
a global situation in which one startling, often unexpected development follows another, prediction is perilous. At a popular level, however, the basic picture is clear
enough: continued economic decline combined with a pervasive sense that existing systems and institutions are incapable of setting things right is already producing a
potentially lethal brew of anxiety, fear, and rage. Popular explosions of one sort or another are inevitable. Some sense of this new reality appears to have percolated
In testimony before the Senate Select Committee on Intelligence on
the new Director of National Intelligence, declared, “The primary near-term
security concern of the United States is the global economic crisis and its geopolitical implications…
Statistical modeling shows that economic crises increase the risk of regime-threatening instability if they
persist over a one to two year period” — certain to be the case in the present situation. Blair did not specify which countries he had in mind when
he spoke of “regime-threatening instability” — a new term in the American intelligence lexicon, at least when associated with economic crises — but it is clear
from his testimony that U.S. officials are closely watching dozens of shaky nations in Africa, the Middle
East, Latin America, and Central Asia.
up to the highest reaches of the U.S. intelligence community.
February 12th, Admiral Dennis C. Blair,
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AT – Social Security & Medicare make it inevitable
Social Security & Medicare are irrelevant – they are paid out of current taxes
COOK 5 – 16 – 09 Senior Editor of The Atlantic, National Journal Columnist, MBA
Oxford & London School of Economics
[Clive, http://www.nationaljournal.com/njmagazine/wn_20090516_3269.php]
No sooner had the administration released this bad news than the Social Security and Medicare
trustees issued their annual report. Again because of revenue shortfalls, both programs are running
down their assets faster than expected. According to the new projections, Social Security's trust fund will
be gone by 2037, four years sooner than in the previous report, and Medicare's by 2017, two years sooner
than projected. Admittedly, the trust-fund structure of these programs is a bookkeeping fiction.. In economic
terms, Social Security and Medicare are really just enormous pay-as-you-go programs, financed out of
current taxation. The disappearance of the funds has no economic significance. The
point is simply that at present levels of payments and receipts, they are adding faster than before to projected
fiscal deficits.
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AT – Stimulus solved
Stimulus didn’t help – money is too slow and it gets redirected by states to rich people who
don’t need it
WASHINGTON POST 3 – 15 – 09
http://www.washingtonpost.com/wp-dyn/content/article/2009/05/14/AR2009051403659.html
YOU MAY RECALL President Obama urging Congress to pass the stimulus bill immediately because the
economy so desperately needed money. The massive recovery bill was passed, and, recently, a few
"green shoots" have been popping up -- indicating that, perhaps, the worst may be over. Is it a result of
the stimulus? Tough to say, but, given the amount of money that has actually gone out the door,
probably not. Government agencies have thus far spent $29 billion of the $787 billion stimulus
package, and less than that has gone out in tax cuts. What has been spent has mostly gone to Medicaid
and unemployment insurance -- real "shovel-ready" programs in that they are already in place. It is true that
just knowing that money has been authorized ($88 billion so far) can allow projects to get started and jobs to
be created. Nonetheless, of the $20 billion approved for spending so far for the Education Department,
for instance, 97.2 percent remains unspent. Of the $10 billion approved for the Transportation
Department, a full 99.7 percent is still left to be spent. The challenge of getting government money out the
door fast is one reason that some economists challenge the value of Keynesian stimulus policies. By the
time checks are being written, they argue, an economic recovery is often underway. The result can
be an inflationary waste of money. That risk was heightened in this case because the administration
decided against a traditional package, one based on the three Ts: timely, temporary and targeted. Instead, it
opted for a more ambitious, long-lasting package; one quarter of the funds are not even slated to be spent
until 2011 or beyond. That decision had both economic and political rationales. Because the recession
looked likely to be a long one, a longer-lasting package seemed sensible. It also provided Mr. Obama an
opportunity to get started on many of his campaign promises, from improving health information technology
to advancing alternative energy. The administration argued that this spending, even if not so stimulative,
would help the economy grow in a healthier way once growth did resume. Economics being what it is, we'll
never know with certainty whether this package was optimal. The administration is ramping up arguments
that millions of jobs are being saved or created, but it is impossible to gauge what would have happened
without the stimulus package or with a more targeted one. The Federal Reserve Board has found that
money for the most part is going to states with the greatest need. However, an Associated Press study
found that within states, stimulus dollars are more likely to be misdirected to localities with better
employment situations. A "transformational" investment stimulus package may turn out to be a good
fit for this deep recession, and we hope most of the dollars will be spent productively. But as the economy
limps along, it would be nice to get the money out a bit faster.
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AT- US econ not key to global econ
US economic collapse will destroy the global economy
Mead 04 – Senior Fellow at Council on Foreign Relations
[Walter Russell, “America's STICKY Power,” Foreign Policy, Mar/Apr, Proquest]
Similarly, in the last 60 years, as foreigners have acquired a greater value in the United States-government
and private bonds, direct and portfolio private investments-more and more of them have acquired an interest
in maintaining the strength of the U.S.-led system. A collapse of the U.S. economy and the ruin of the
dollar would do more than dent the prosperity of the United States. Without their best customer,
countries including China and Japan would fall into depressions. The financial strength of every
country would be severely shaken should the United States collapse. Under those circumstances, debt
becomes a strength, not a weakness, and other countries fear to break with the United States because they
need its market and own its securities. Of course, pressed too far, a large national debt can turn from a source
of strength to a crippling liability, and the United States must continue to justify other countries' faith by
maintaining its long-term record of meeting its financial obligations. But, like Samson in the temple of the
Philistines, a collapsing U.S. economy would inflict enormous, unacceptable damage on the rest of the world.
That is sticky power with a vengeance.
US economy is key to global economy
News Ratings. June 23, 2006.
(“US slowdown to impede global economic growth”
http://www.newratings.com/analyst_news/article_1304298.html)
Analysts at Dresdner Kleinwort Wasserstein say that the US economic slowdown is likely to have a
significant impact on the global economy. In a research note published this morning, the analysts mention
that exports continue to be the key growth driver in major economies, such as Japan and the Eurozone. Any
deceleration in the US economy would impact exports and adversely affect domestic demand, the analysts
say. Moreover, the reversal of interest rate expectations, triggered by a US slowdown, is likely to weaken
the US dollar, maybe very substantially, Dresdner Kleinwort Wasserstein adds. A slowdown in demand
from the US, combined with a weaker dollar, has historically exerted pressure on global economic growth,
the analysts point out.
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2NC Inflation Impact—Chinese Economy
Dollar strength key to Chinese economic stability
Karabell 9 [author and president of River Twice Research “Why Beijing Wants a Strong Dollar,” NYT May 28]
But even if there were buyers, the issue is deeper than economics. China's
investments in the U.S. are as much a political
decision as an economic one. They represent the culmination of two decades of assiduous efforts on
the part of the Chinese government and many U.S. companies to bind the two economies together.
Until recent months, the common understanding of the relationship between China and the U.S. was that China produced cheap stuff that Americans
bought. But that
was always just one aspect of a much more intertwined relationship, one that entails
significant growth for U.S. companies as they sell to Chinese consumers and provide support for
China's industrial build-out. The Chinese government has actively tethered its economic and political
stability to the U.S.
To some degree, China's holdings prove the old adage: If a bank lends you $1 million, you've got a
problem; but if a bank lends you $10 million, the bank has a problem. With so much invested in the
U.S., China can no more tolerate a severe U.S. implosion than Americans can. Any action taken by
China to imperil the economic stability of the U.S. would be an act of mutually-assured destruction.
Nuclear war
Plate 3 [Tom, Professor at UCLA, The Straights Times, “Neo-cons a bigger risk to Bush than Chin,” 6-28-2003]
imagine a China disintegrating- on its own, without neo-conservative or Central Intelligence Agency prompting, much less outright military invasion because
the economy (against all predictions) suddenly collapses. That would knock Asia into chaos. A massive flood of
refugees would head for Indonesia and other places with poor border controls, which don’t’ want them and cant handle them; some in
Japan might lick their lips at the prospect of World War II revisited and look to annex a slice of China. That would send Singapore and Malaysia- once
occupied by Japan- into nervous breakdowns. Meanwhile, India might make a grab for Tibet, and Pakistan for Kashmir. Then
you can say hello to World War III, Asia style. That’s why wise policy encourages Chinese stability, security and economic
growth – the very direction the White House now seems to prefer.
But
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2NC Inflation Impact—Food Prices
High food prices
Patalon 9 [William Patalon III is the Executive Editor and Senior Research Analyst for Money Morning, “Food Price Hike Suggests Inflation Is
Higher Than Our Government Reports,” Jan 21 http://jutiagroup.com/2009/01/21/food-price-hike-suggests-inflation-is-higher-than-ourgovernment-reports/]
Prices for food in U.S. grocery stores jumped 6.6% last year - the biggest spike since 1980 - underscoring yet again that
inflation is a much bigger problem than government officials, or most economists, say it will be.
Of all food categories, prices for cereal and baked goods hit U.S. consumers the hardest, zooming 11.7% in 2008 over 2007. Prices for meats,
poultry, fish and eggs gained 5.1%. Fruits and vegetable rose 3.4%, while dairy products advanced
2.7%. It was the second straight year U.S. consumers were forced to pay a lot more for their groceries. In 2007, food prices at supermarkets rose
5.6%. Prices rose only 1.4% in 2006.
Consumers had to pay the price last year because food
makers battled the largest spike in commodities they’ve ever
faced, walloped by duel increases in key food ingredients and fuel, which all marched to historic
highs in July, a month in which crude oil peaked at an all-time record of more than $147 a barrel.
This major escalation in food prices calls to question contentions that inflation is not a problem, a
stance that - on the surface - appears to be supported by government statistics that appear to be
fairly benign.
Kills billions
TAMPA TRIBUNE 96, staff, January 20, 1996, LN.
On a global scale, food supplies - measured by stockpiles of grain - are not abundant. In 1995, world production failed to meet demand
for the third consecutive year, said Per Pinstrup-Andersen, director of the International Food Policy Research Institute in Washington, D.C. As a
result, grain stockpiles fell from an average of 17 percent of annual consumption in 1994-1995 to 13 percent at the end of the 1995-1996 season, he
said. That's troubling, Pinstrup-Andersen noted, since 13 percent is well below the 17 percent the United Nations considers essential to provide a
margin of safety in world food security. During the food crisis of the early 1970s, world grain stocks were at 15 percent. "Even
if they are
merely blips, higher international prices can hurt poor countries that import a significant portion of
their food," he said. "Rising prices can also quickly put food out of reach of the 1.1 billion people in the
developing world who live on a dollar a day or less." He also said many people in low-income countries already spend more than half of
their income on food.
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Dollar Hegemony Good—Trade
Dollar hegemony solves trade
Caploe 8 [David, The Straits Times, “It's the fiscal deficit, stupid,” Sept 2 Lexis]
The origins of this system lie in the shattered condition of the world economy after
World War II. At that time, the only currency
universally accepted for international trade was the US dollar. This 'dollar hegemony' has enabled the US to
survive and prosper for decades despite the fact it has run consistent balance of payments deficits since 1959 - a condition that would
have devastated any other country whose currency wasn't the world's 'reserve currency'. Put simply, countries accept dollars, even in their
currently weakened state, to buy and sell from each other - above all oil, which has been priced in US dollars
since even before World War II.
The result of dollar hegemony has been a 'win-win' situation for both the US and the rest of the world:
The US can import goods and services far beyond its immediate ability to pay, and the rest of the world has
been willing to take dollars, which they can use themselves. In this way, America serves as not just the global consumer of last resort - the place where
countries know they are usually able to off-load their inventories - but also the global financier of last resort. That is, the
supply of dollars
moving around the world has, for the last half century, helped maintain the flow of not just trade,
but international investment as well.
Trade solves war
Griswold 98 [Daniel Griswold, Associated Director of the Center for Trade Policy Studies at the CATO Institute,
“Peace on Earth, Free Trade
for Men,” 31 Dec, http://www.cato.org/dailys/12-31-98.html]
Free trade also encourages people and nations to live in peace with
one another. Free trade raises the cost of war by making nations more economically interdependent. Free
trade makes it more profitable for people of one nation to produce goods and services for people of
another nation than to conquer them. By promoting communication across borders, trade increases
understanding and reduces suspicion toward people in other countries.
Advocates of free trade have long argued that its benefits are not merely economic.
International trade creates a network of human contacts. Phone calls, emails, faxes and face-to-face meetings are an integral part of commercial relations between people of different nations. This
human interaction encourages tolerance and respect between people of different cultures (if not toward protectionist politicians).
Ancient writers, expounding what we now call the Universal Economy Doctrine, understood the link between trade and international harmony. The fourth-century writer Libanius declared in his
Orations (III), "God did not bestow all products upon all parts of the earth, but distributed His gifts over different regions, to the end that men might cultivate a social relationship because one would
have need of the help of another. And so He called commerce into being, that all men might be able to have common enjoyment of the fruits of the earth, no matter where produced."
trade makes war a less appealing option for governments by raising its costs. To a nation committed to free trade, war
not only means the destruction of life and property. It is also terrible for business, disrupting
international commerce and inflicting even greater hardship on the mass of citizens. When the door
to trade is open, a nation's citizens can gain access to goods and resources outside their borders by
offering in exchange what they themselves can produce relatively well. When the door is closed, the
only way to gain access is through military conquest. As the 19th century Frenchman Frederic Bastiat said, "When goods cannot cross borders,
Open
armies will."
The century of relative world peace from 1815 to 1914 was marked by a
dramatic expansion of international trade, investment and human migration, illuminated by the example of Great Britain. In
contrast, the rise of protectionism and the downward spiral of global trade in the 1930s aggravated the
underlying hostilities that propelled Germany and Japan to make war on their neighbors.
In the more than half a century since the end of World War II, no wars have been fought between two nations that
were outwardly oriented in their trade policies. In every one of the two dozen or so wars between nations fought since 1945, at least one side was
History demonstrates the peaceful influence of trade.
dominated by a nation or nations that did not pursue a policy of free trade.
Dollar key to U.S. Hegemony
Dollar hegemony is key to primacy
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Kirshner 8 [Jonathan Kirshner, Department of Government @ Cornell University, “Review of International Political Economy,” august 1,
eview of International Political Economy,15:3,418 — 438 Informaworld]
Setting aside these red herrings, the
US would, nevertheless, face real consequences from the contraction of the
international role of the dollar. They are reduced international political influence, the loss of the
benefits it has become accustomed to enjoying (in particular, the ease with which it is able to finance its deficits), and the
risk of reduced macroeconomic policy autonomy during international political crises. These latter two
effects, which would directly affect US power, would be more acute and salient if the change in the dollar ’s role comes about
suddenly in the wake of an international financial crisis, and less dramatic, though still significant, if the dollar ’s relative primacy were to erode
gradually. Either of these changes would take place in a domestic (American) political context that would likely magnify the extent to which dollar
diminution contracts US power. It is hard to quantify the reduction of political influence that would result from diminished global use of the
greenback, but that does not make it any less real. The
loss of dollar primacy, even to a (most likely) ‘first among equals’ status, would
erode the Hischmanesque benefits that the US garners as a result of the dollar ’s global role. In a world
where fewer hold dollars, fewer would also have a stake on the dollar, and subtly, they would have less of a
stake in the US economy and US policy preferences more generally. At the same time, the issuers of currencies that
fill in the gaps where the dollar once reigned would see their own influence enhanced, as holders of, say, euros, see their interests more enmeshed in
the interests of the European Union. As
the dollar is used less in some parts of the world (including most likely Europe,
US would lose twice, first, from the reduction in its own
influence, and second, from the enhanced political influence of other powers. More concretely, with the
reduction in the dollar ’s prestige and thus its credibility, the US would lose some of the privileges of primacy that it takes for
Asia, and parts of Africa and the Middle East), the
granted and routinely, if implicitly, invokes. Here the shift in status from ‘top’ to ‘negotiated’ currency is paramount.36 In a scenario where the dollar ’s
role receded, and especially as complicated by an increasingly visible overhang problem (as more actors get out of dollars), American policies would no
longer be given the benefit of the doubt. Its macroeconomic management would be subject to intense scrutiny in international financial markets and its
deviations from financial rectitude would start to come at a price. This would affect the US ability to borrow and to spend. Federal government
spending would take place under the watchful eye of international bankers and investors, whose preferences will always be for cuts. Borrowing from
abroad would also come at a higher price. In the past, periods of notable dollar weakness led to US borrowing via mechanisms that involved foreign
currency payments and which were designed to insure creditors against the possibility of a decline in the value of the dollar. Each of these experimental
mechanisms, the Roosa Bonds of the 1960s and the Carter Bonds of the 1970s, were only used on a modest scale; but they suggest the antecedents for
future demands by creditors that would limit the ability of the US to borrow in dollars.37 It
would also become more difficult to
reduce the value of US debts via devaluation and inflation, devices which have served the US well in
the past, but which in the future would both work less well and further undermine the dollar ’s
credibility. Increased (and more skeptical) market scrutiny of American macroeconomic policy choices would also
affect the US during moments of international crisis, and during periods of wartime. Markets tend to react
negatively to the prospects for a country’s currency as it enters crisis and war, anticipating increased prospects for government spending, borrowing,
inflation, and hedging against general uncertainty.38 Under dollar hegemony, the US tended to benefit from the ‘flight to quality’ during moments of
international distress; but in the context of dollar diminution, with markets much more nervous about the dollar, the US would find itself
uncharacteristically under financial stress during crucial moments of international political confrontation. Here some analogy to Britain is illustrative –
during World War II the international role of the pound was an important source of support; but after the war, with sterling in decline, the
vulnerability of the pound left Britain exposed and forced it to abandon its military adventure over Suez in 1956.39 These new pressures on the dollar
would take place in a distinct domestic political context. How would the US political system react to life under the watchful and newly jaundiced eye of
international financial markets, with reduced macroeconomic policy autonomy, greater demands that its economic choices meet the ‘approval’ of
international financiers and investors, and forced to finance its military adventures not by borrowing more dollars, but with hard cash on the
barrelhead? There
is good reason to suspect that in response, the US will scale back its international
power projection, to an even greater extent than necessarily implied by its underlying economic
power. For the US seems to be at the political limits of its fiscal will, consistent with theories that anticipate great powers will become addled by
consumerism and the corroding consequences of affluence.40 This is particularly notable with regard to America’s recent
wars. The 9/11 attacks revealed a real threat to the nation’s security, yet the subsequent war in
Afghanistan has been undertaken with caution regarding risks taken and resources (both military and
economic) expended; investments in homeland security have been relatively modest given the needs
at hand, and appropriations for securing ‘loose nukes’ have been inadequate.41 The yawning divergence between
the government’s rhetoric associated with the stakes of the Iraq war and the unwillingness of the administration to call for any national sacrifices on its
behalf strongly suggest that America’s leaders are deeply skeptical of the nation’s ability to mobilize its vast wealth in support of foreign policy abroad.
Indeed the Iraq war is the only large war in US history that has been accompanied by tax cuts. Major tax increases were associated with the War of
1812, the Civil War, World War I, World War II, the Korean War, and even, if with great reluctance on the part of President Johnson, the Vietnam
War.42 From one perspective, military spending in the US is not at historically high levels. As a percentage of gross domestic product, US defense
spending (3.9% in 2004, 4.0% in 2005) is in fact near post-World War II lows, and well below the levels associated with other wartime periods (13% in
1953, 9.5% in 1968). However, that amount of spending is nevertheless extremely high in when considered in absolute dollars ($454.1 billion in 2004;
493.6 billion in 2005), and given that at these levels, the US comes close to spending as much on defense as the rest of the countries of the world
combined.43 It is these figures that are more likely to be decisive in the future when the US is under pressure to make real choices about taxes and
spending in the future. When borrowing becomes more difficult, and adjustment more difficult to postpone, choices will have to be made between
raising taxes, cutting non-defense spending, and cutting defense spending. In sum, while
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repeatedly in the past, the currents of massive US debt, its unprecedented current account
imbalances, the emergence of the euro, and, most important of all, a distinct geopolitical setting,
have caused the dollar to drift towards uncharted waters. As a result, a reduced international role for the dollar plausible
and perhaps even likely, and it would have significant political consequences. A general downward recasting of US political influence would be
accompanied by much more novel and acute inhibitors on the willingness and ability of the US to use force abroad – macroeconomic distress during
international crises, and consistent pressure on federal budgets. The reduction in US power and influence would be less salient if dollar diminution
occurs gradually rather than suddenly, and if the American public suddenly becomes willing to tolerate tax increases and cuts to other government
spending. But even these circumstances would mitigate, not eliminate, the consequences of the erosion of dollar primacy for the US.
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Dollar Hegemony Good—Soft Power
Dollar solves hard and soft power
Kirshner 8 [Jonathan Kirshner, Department of Government @ Cornell University, “Review of International Political Economy,” august 1,
eview of International Political Economy,15:3,418 — 438 Informaworld]
During the 1960s it was understood that the
‘principal advantage’ of the Bretton Woods system for the US was
that its balance of payments deficits ‘can be financed in part through increases in the dollar reserves
held by foreign monetary authorities’. To the extent that its deficits are fi- nanced in part by increased holdings of dollar reserves
abroad, the US could run larger balance of payments deficits than other states; more- over, and perhaps with even
greater consequences, ‘it [could] take greater risks in adopting economic policies that might have adverse
effects on the balance-of-payments’.24 This remains true for as long as the dollar retains its
attractiveness abroad; today, the principal overt benefits that the US enjoys from the international role of the dollar are the ability to sustain
deficits on its international accounts that others can not, and the related and crucial ability not simply to run deficits at a certain magni- tude, but to
take risks and adopt economic policies that would, anywhere else, elicit a withering ‘disciplinary’ response from international financial markets.
The key currency role of the dollar also provides to the US not only overt power via its enhanced
autonomy and discretion, it increases the po- litical influence and capacity of the US, via what has
been called ‘structural power ’. There are two distinct (if related) strands of thought on structural power that are relevant here, one
associated with Susan Strange and the other with Albert Hirschman.
Strange’s conception of structural power owes something to Woody Allen; as with aspiring playwrights, for
hegemons, 90% of
structural power is just showing up. Simply by its enormous size, a dominant state creates the
context in which political interactions take place – often without even the intention of doing so. Thus,
for example, any discussion of the inter- national monetary system takes place in the context of dollar primacy. Of course, structural power
can also be quite purposeful, although it is ex- pressed not by ‘relational’ power or coercion over
specific outcomes, but via agenda setting – ‘the power to decide how things shall be done, the power
to shape frameworks within which states relate to each other ’.25 The strand of structural power associated with
Hirschman emphasizes how the pattern of economic relations between states can transform the calculation of political interest. States (and private
actors within states) that use the dollar (and especially those that hold their reserves in dollars) develop a vested interest in the value and stability of the
dollar. Once in widespread use, the fate of the dollar becomes more than just America’s problem – it becomes the problem off all dollar holders (to
varying de- grees from case to case).
Even those that simply peg to the dollar as part of a broader international
economic strategy also have an interest in fu- ture of the greenback even without signing on as
‘stakeholders’ the way large holders of dollars have, advertantly or not, as they accumulate dollar
denominated assets.26
primacy increases both the ‘hard power ’ and the ‘soft power ’ of the US
Regarding the former, Amer- ica’s coercive capacity is enhanced by its greater autonomy to run deficits and
to adopt policies that would otherwise elicit a countervailing market reaction . As for the latter, the structural
benefits afforded to the US can be classified under Nye’s definition of ‘soft power ’ – getting others to want what you
In the contemporary system, then, dollar
want them to want. For Strange the weight of the dollar benefits the US by necessitating that relevant political arenas will be operate in
such a way that cannot but account for American interests. For Hirschman, the US gains because participation in a dollar-
based international monetary or- der both shapes the perceived self-interests of states and of many private
actors within states, and also, more concretely, by creating stakeholders in the fate of the dollar.
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Soft Power good
30 regional conflicts will go global in a world without U.S. soft power
Joseph Nye, badass and frmr assis. Sec defense, Winter 1996, W. Q., p ln
While generally less threatening to U.S. interests than global or regional balance of power conflicts,
communal conflicts are the most likely kind of post-cold war conflict and have thus far proved the
most frequent. Less than 10 percent of the 170 states in today's world are ethnically homogenous. Only half have one ethnic group that accounts for as much as 75 percent
of their population. Africa, in particular, is a continent of a thousand ethnic and linguistic groups squeezed into some 50-odd states, many of them with borders determined by colonial
powers in the last century with little regard to traditional ethnic boundaries. The former Yugoslavia was a country with five nationalities, four languages, three religions, and two
. As a result of such disjunctions between borders and peoples, there have been some 30
communal conflicts since the end of the Cold War, many of them still ongoing. Communal conflicts,
particularly those involving wars of secession, are very difficult to manage through the UN and other institutions
alphabets
built to address interstate conflicts. The UN, regional organizations, alliances, and individual states cannot provide a universal answer to the dilemma of self-determination versus the
inviolability of established borders, particularly when so many states face potential communal conflicts of their own. In a world of identity crises on many levels of analysis, it is not
clear which selves deserve sovereignty: nationalities, ethnic groups, linguistic groups, or religious groups. Similarly, uses of force for deterrence, compellence, and reassurance are
much harder to carry out when both those using force and those on the receiving end are disparate coalitions of international organizations, states, and subnational groups. Moreover,
communal conflicts by themselves threaten security beyond their regions, some impose risks of
"horizontal" escalation, or the spread to other states within their respective regions. This can happen
through the involvement of affiliated ethnic groups that spread across borders, the sudden flood of refugees
into neighboring states, or the use of neighboring territories to ship weapons to combatants. The use of
ethnic propaganda also raises the risk of "vertical" escalation to more intense violence, more
sophisticated and destructive weapons, and harsher attacks on civilian populations as well as military personnel. There is also the danger that communal
although few
conflicts could become more numerous if the UN and regional security organizations lose the credibility, willingness, and capabilities necessary to deal with such conflicts.
Leadership by the United States, as the world's leading economy, its
most powerful military force,, and a leading democracy, is a key factor in limiting the frequency and
destructiveness of great power, regional, and communal conflicts. The paradox of the post-cold war role
of the United States is that it is the most powerful state in terms of both "hard" power resources (its
economy and military forces) and "soft" ones (the appeal of its political system and culture), yet it is
not so powerful that it can achieve all its international goals by acting alone . The United States lacks both the international
Preventing and Addressing Conflicts: The Pivotal U.S. Role
and domestic prerequisites to resolve every conflict, and in each case its role must be proportionate to its interests at stake and the costs of pursuing them. Yet the United States can
The U.S.
role will thus not be that of a lone global policeman; rather, the United States can frequently serve as
the sheriff of the posse, leading shifting coalitions of friends and allies to address shared security
concerns within the legitimizing framework of international organizations. This requires sustained
attention to the infrastructure and institutional mechanisms that make U.S. leadership effective and joint
continue to enable and mobilize international coalitions to pursue shared security interests, whether or not the United States itself supplies large military forces.
action possible: forward stationing and preventive deployments of U.S. and allied forces, prepositioning of U.S. and allied equipment, advance planning and joint training to ensure
interoperability with allied forces, and steady improvement in the conflict resolution abilities of an interlocking set of bilateral alliances, regional security organizations and alliances,
and global institutions.
US soft power is key to solving global problems
Joseph S. Nye Jr., Dean of Harvard’s Kennedy School of Government, Foreign Affairs, July/ August 2003.
The problem for U.S. power in the twenty-first century is that more and more continues to fall outside the
control of even the most powerful state. Although the United States does well on the traditional measures
of hard power, these measures fail to capture the ongoing transformation of world politics brought
about by globalization and the democratization of technology. The paradox of American power is that
world politics is changing in a way that makes it impossible for the strongest world power since Rome
to achieve some of its most crucial international goals alone. The United States lacks both the
international and the domestic capacity to resolve conflicts that are internal to other societies and to
monitor and control transnational developments that threaten Americans at home. On many of today’s
key issues, such as international financial stability, drug trafficking, the spread of diseases, and
especially the new terrorism, military power alone simply cannot produce success, and its use can
sometimes be counterproductive. Instead, as the most powerful country, the United States must mobilize
international coalitions to address these shared threats and challenges. By devaluing soft power and
institutions, the new unilateralist coalition of Jacksonians and neo-Wilsonians is depriving Washington
of some of its most important instruments for the implementation of the new national security strategy.
If they manage to continue with this tack, the United States could fail what Henry Kissinger called the
historical test for this generation of American leaders: to use current preponderant U.S. power to achieve an
international consensus behind widely accepted norms that will protect American values in a more uncertain
future. Fortunately, this outcome is not preordained.
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Hard power good
Heg solves regional war, which goes nuclear
HIRSH 03 [Michael At War With Ourselves: Why America is Squandering its Chances to Build a
Better World Oxford University Press, New York-dw pgIO-II]
Yes, it is possible. But first we must cross a psychological threshold ourselves. We need to grasp what
many other nations already understand: the meaning of America in today's world. Despite a century of
intense global engagement. America is still something of a colossus with an infant's brain, unaware of th,e
havoc its tentative. giant -sized bab" steps can cause. We still have some growing up to do as a nation. One of
my favorite movies has always been fi's a Wonderful Life. Like everyone, I'm a sucker for the sentiment. But
I also thought the conceit was ingenious: What if we could all be granted, like Jimmy Stewart's George
Bailey, a look at the world without us? I think it's useful to apply the same conceit to the oneuberpower
world. Suppose, with the end of the Soviet Union, America had mysteriously disappeared as well or.
more realistically, had retreated to within its borders. as it had wanted to do ever since the end of World War
II. What would a Jeffersonian America, withdrawn behind its oceans, likely see unfolding overseas?
Probably a restoration of the old power jostle that has sent mankind back to war for many millennia.
One possible scenario: Japan would have reacquired a full-scale military and nuclear weapons. and
would have bid for regional hegemony with China. Europe would have had no counterbalance to yet
another descent into intraregional competition and, lacking the annealing structure of the postwar
Atlantic alliance. mav never have achieved monetary union. Russia would have bid for Eurasian
dominance, as it has throughout its modern history. Most important of all, the global trading system,
which the United States virtually reinvented after World War II (with some help from John Maynard
Keynes and others), would almost certainly have broken down amid all these renewed rivalries. killing
globalization before it even got started. That in turn would have accelerated many of the above
developments. A war of some kind would have been extremely likely. And given the evidence
of the last century. which shows that America has been increasingly drawn into global conflicts, the U.S.
president would be pulled in again, but this time in a high-tech. nuclearized, and very lethal age of
warfare. America has a unique opportunity to thwart history's most ruthless dictate: that nations are ever
fated to return to a state of anarchy and war. It has a unique opportunity do what no great power in history
has ever done-to perpetuate indefinitely the global system we have created. to foster an international
community with American power at its center that is so secure that it may never be challenged. But this can
be done only through a delicate balancing of all our tools of power and influence. And it can be done only by
bridging the ideological gulf that continues to divide Americans over our place in the world. to-II
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AT- Heg impact turns
Heg solves the impact to these arguments- US POWER STOPS HISTORICAL
BACKLASH AND COUNTER BALANCING –the strength of the dollar is the critical
internal link to this stability
HIRSH 03 [Michael At War With Ourselves: Why America is Squandering its Chances to Build a
Better fVorld Oxford University Press. New York-dw pg_]
For the present the best definition of what this all adds up to-the international community-must be a
negative one. By this I mean its existence can be proved by the absence of anarchy jn the
international system. It can be seen in the failure of other major powers, in the face of US.
dominance. to build up alliances against the United States despite the manv predictions by realist
scholars of international relations that they would. The existence of a compelling alternative global
system-what I am calling the international community-helps to explain why none of the major powers. the
European Community, Japan. Russia, even China, is engaged in a major military buildup and the
geopolitical power games of the past. Scholars going back to Thucydides have argued
persuasively that great economic powers inevitably try to convert that power into
influence on the world stage. Countries such as China and Japan and new hybrid structures such as
the EU should swiftly try to convert their economic power into military and strategic power. They all
occasionally make noises about doing so. but on the whole their defense spending has remained steady
and small. The challenge now is to say why. I suggest it is because there is an intervening structure, the
global system backed by America's stabilizing power, that has provided prosperitv and security to
most countries that are part of it (or at least has persuaded them that it will provide prosperity and
security) and has made the old path less necessary.
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DA turns case- Economic collapse hurts social service
Increased debt from spending lead to a decrease in social services like Medicare and Social
Security.
Clemmitt 09 (‘Public-Works Projects’, M. Clemmitt for CQ Researcher, February 20, 2009,
library.cqpress.com.proxy.lib.umich.edu/cqresearcher/cqresrre2009022000)
Many economists say the present recession is so dire that only massive government spending has a chance to jumpstart the economy. However, many conservatives argue that public-works spending at the levels proposed by
Democrats will run up the national debt to disastrous proportions. The Democrats' stimulus plan will cause a
dangerous expansion of the national debt, according to the House Republican Study Committee. The federal debt
may grow by an unprecedented $2 trillion in 2009, an unsustainable burden given that it already grew by more than
$2 trillion during the last two years, the panel argues. “In principle, every dollar spent by the government could
cause national income to increase by more than a dollar it if leads to a more vibrant economy,” noted Harvard
University Professor of Economics N. Gregory Mankiw. But “the fly in the ointment . . . is the long-run fiscal
picture. Increased government spending may be a good short-run fix, but it would add to the budget deficit,” making
it harder to fulfill other responsibilities like paying Social Security and Medicare benefits to the baby boomers now
beginning to retire. So he thinks Democratic spending plans are too big.
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econ collapse causes poverty
Economic Collapse leads to more poverty because of unemployment.
McKenna Journalist March 9, 2009 (The Globe and Mail (Canada), “'A MUCH WORSE DISASTER'”, March 9,
2009, LexisNexis Academic)
Sharon McIntosh's plunge into poverty began on a bitterly cold day in January. The 45-year-old single mother lost
her job cleaning rooms at a Best Western motel, along with her health insurance. Now, she scrapes by on $42 (U.S.)
a week unemployment insurance - less than half what she was making before. Even those meagre benefits run out in
a month, and she isn't sure how she'll pay the rent or keep her car. "I just don't know what turn this economy is
taking," she said as she scoured slim job postings at a state-run employment office in Tupelo, Miss. Ms. McIntosh
has the added misfortune of being jobless in a state with notoriously tough UI eligibility rules and the stingiest
benefits - within a country that already has the weakest social safety net in the industrialized world. Mississippi's
maximum benefit is $230 a week, a few dollars above the U.S. poverty line, and half of what the unemployed get in
many other states. Fewer than a quarter of the state's unemployed get any benefits at all, ranking it 46th out of 50
states. Ms. McIntosh's only option is to get another job, fast. And that may be the point. "Losing your job is a much
worse disaster for Americans than it is for people in Europe or Canada," said Gary Burtless, a former U.S. Labour
Department economist and now a senior fellow at the Brookings Institution in Washington. "Unlike most of the
Western world, when we lose our jobs in the United States, most of us lose our health insurance."The system is fine
for people with steady jobs who experience short stints of unemployment. But it's not much help for the likes of Ms.
McIntosh, with spotty employment histories, in an economy now losing jobs at an alarming rate. The U.S. economy
lost 651,000 jobs in February, pushing the toll to 4.4 million since the recession began in late 2007. The jobless rate
also shot up to a 25-year high of 8.1 per cent, from 7.6 per cent in January. The unemployment rate in Tupelo,
whose factory-based economy has been ravaged by layoffs in the furniture-making industry, was already at 9.7 per
cent in January, and headed higher. Massive holes in the U.S. unemployment system are making hard times much
tougher than necessary, Mr. Burtless said. Two years ago, the Labour Department asked Mr. Burtless to identify
major gaps in the UI system, and to suggest fixes. He said the Bush administration buried his report, and it was
never published. Mr. Burtless pointed out that the last time the United States reformed its UI system was in the mid1970s, and the gaps have grown ever larger. Workers must prove they're unemployed through no fault of their own.
That means that you're out of luck if you quit your job, even for a compelling reason, such as following a transferred
spouse or to care for a sick family member. Part-timers and temporary workers, now the backbone of the economy,
are virtually excluded. And the cost of health care has soared, leaving millions of jobless uninsured.
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Growth Key to solve Poverty
Economic Decline would reverse the benefits of social services
OLIPHANT 00 entitlements policy analyst at the Cato Institute
[Lisa E., “Four Years of Welfare Reform: A Progress Report,” No. 378 August 22, 2000,
http://www.cato.org/pubs/pas/pa378.pdf]
Despite the fact that in recent years “policy reform—not economics—is the principal engine driving the
decline in dependence,”2 3 there remains cause for concern about what would happen during an economic
slowdown or recession. The Committee for Economic Development predicts: “This reduction in welfare rolls
could quickly reverse itself if the economy weakens. With low seniority and limited skills, many former
recipients remain vulnerable to layoffs from their new jobs. In a slack labor market, many would experience
considerable difficulty finding new positions, as would current welfare recipients seeking to leave the rolls. A
weaker economy would sharply reduce the number of jobs available for former welfare recipients, and many
might attempt to return to public assistance.”24 And, in the event of such a slowdown, it is unlikely that states
would continue to enforce such important guards against recidivism as strict work requirements, sanctions
policies, and time limits.
Economic growth is key to successful welfare programs
OLIPHANT 00 entitlements policy analyst at the Cato Institute
[Lisa E., “Four Years of Welfare Reform: A Progress Report,” No. 378 August 22, 2000,
http://www.cato.org/pubs/pas/pa378.pdf]
Since rapid caseload decline began to accompany states’ experimentation with wel-fare reform in the early
1990s, a debate has raged over the primary causes of the declining caseload. The evidence suggests that early
caseload declines were largely a response to the booming job market, whereas the more recent and
modest drops in the welfare rolls have stemmed primarily from states’ tougher welfare policies. The
president’s Council of Economic Advisers has undertaken the most comprehensive analysis of this question
to date. Tracking the rate of caseload decline alongside the unemployment rate and changes in that
rate, the study finds, as seen in Figures 4 and 5, that the economy was responsible for 26 to 36 percent of
the falling rolls in the period 1993 to 1996 and a much smaller 8 to 10 percent between 1996 and 1998. For
the latter period, as Figure 5 shows, the council finds that the influence of changes in the welfare law has
exceeded that of the hot economy, producing roughly one-third of the reduction in the caseload between 1996
and 1998. The council notes that reform in recent years has “caused a large drop in welfare participation, a
drop that is independent of the effects of the strong labor market.”1 7 Thus, both the hot economy and
welfare reform have played important and shifting roles in generating the country’s caseload decline.
As the Committee for Economic Development observes, “A fortuitous coincidence of welfare reform
with a period of sustained economic growth has produced increases in employment that neither
prosperity alone nor changes in public assistance policy alone could have achieved.”1 8
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2ac Frontline
Non unique- No action to stop spending and inflation are likely any time soon
Patrice Hill – staff writer for the Washington Times- 07/09/09- Bloated deficits endanger dollar's
global status- Online- http://www.washingtontimes.com/news/2009/jul/09/bloated-deficitsendanger-dollars-global-status/print/
The dollar's decline stokes inflation in the United States while causing economic problems for
countries such as Russia and Brazil that export oil and other commodities that are priced in dollars. In a perverse chain
reaction that took hold in financial markets last year and has re-emerged recently, the dollar's decline put pressure on commodity prices,
leading to a spiral in the price of oil and basic foodstuffs, and driving up inflation worldwide. While no official action is likely
for now, the debate about the dollar's future has been intensifying as the Obama administration and
Congress move to pass a $1 trillion health care bill, consider a second economic stimulus bill and craft other
costly legislation that would increase already bloated budget deficits. The precarious effect this has had on the dollar
prompted World Bank President Robert B. Zoellick to warn this week that the U.S. must pay attention to the
problem.
Uniqueness overwhelms the link- There is absolutely no risk of people dumping the dollarthere cards are all rhetoric as even china and Russia admit the global downturn makes the
dollar the only safe haven currency
Patrice Hill – staff writer for the Washington Times- 07/09/09- Bloated deficits endanger dollar's
global status- Online- http://www.washingtontimes.com/news/2009/jul/09/bloated-deficitsendanger-dollars-global-status/print/
China, Russia and Brazil threatened early last month to use this week's summit to push their view that
the world needs to start seeking an alternative reserve currency. But Chinese officials more recently
backed off and even sought to reassure U.S. leaders in advance of the G-8 meeting, saying they don't
think the dollar will be replaced any time soon. "The U.S. dollar is still the most important
and major reserve currency of the day, and we believe that that situation will continue for many years to come,"
Chinese Vice Foreign Minister He Yafei told reporters in Rome. "You may have heard comments, opinions from
academic circles about the idea of establishing a super-sovereign currency. This is all, I believe, now a
discussion among academics. It is not the position of the Chinese government." Financial markets are particularly
sensitive to China's comments on the matter, because it is thought to hold about 70 percent of its nearly $2 trillion in reserves in dollardenominated bonds and the value of those investments erodes as the dollar falls. The foreign minister's statement helped to relieve
pressure on the dollar, at least temporarily. Even Russia, which has become the most vocal critic of the U.S.
currency's role in world commerce, backed off its strident calls for action as the summit neared. "The
dollar system or the system based on the dollar and euro have shown that they are flawed," Russian President
Dmitry Medvedev told the Italian media. "But I am a realist, and I understand that today
there is no alternative to the dollar or the European currency." While China would like the International Monetary
Fund to develop a new sovereign currency to replace the dollar, Russia has been pushing the idea of "regional reserve currencies," an
approach that likely would heighten the role of the Russian ruble in Eastern European and Asian commerce. Some European leaders
have called on the United States to defend the dollar in light of the verbal trouncing it is getting around the world. "I have just one
message," said European Central Bank President Jean-Claude Trichet. "It is extremely important that the United States of America [say]
that a strong dollar is in the interests of the United States of America." So far, no Obama administration official has complied, although
Treasury Secretary Timothy F. Geithner went to China in May to make a case quietly for the trustworthiness of U.S. investments. "The
extraordinary loosening of fiscal and monetary policy in the United States is the main reason the dollar's dominant reserve status is being
questioned," said David Woo, foreign-exchange strategist at Barclays Capital. Many foreign investors fear that the Federal Reserve has
been feeding Congress' appetite for spending and literally printing money to help finance the U.S. deficits. But while Europeans
and the Chinese may eventually want their currencies to enjoy the "exorbitant privileges" afforded by
reserve status - including interest-free loans from countries around the world that hold dollars in reserve - no other
country is prepared to make the sacrifices needed to displace the dollar at this time, he
said. China, in particular, would have to allow its currency, the yuan, to float freely in global markets something it has been unwilling to do because of the advantage in trade it gains from pegging its currency to
the dollar. "There are at present no obvious alternatives to the dollar," Mr. Woo said, but as a result, "U.S. fiscal profligacy" will
continue to push the dollar lower and force up interest rates on U.S. Treasury bonds and other securities. "The U.S.'s ability to obtain
cheap external funding for financing its twin deficits is likely to be curtailed," he said. Jamie Heighway, market analyst at Custom
House, a Canadian investment firm, noted that the dollar ironically has benefited from news that the U.S. and
world economies may be further away from a recovery than previously thought. Throughout the
economic crisis, the dollar has intermittently reprised its role as a safe-haven currency for investors
fleeing riskier markets around the world.
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Non Unique- The economy’s current upturn is all based on smoke and mirrors. Best
indicator show the market is going down soon- prefer our evidence as it synthesized
multiple economic indicators and projects into the future
Jay Taylor- Independent Economic analysit and Gold Speculator,- Deflation or Inflation, Gold is as Good as it
Gets- Jul 11, 2009- http://www.marketoracle.co.uk/Article11955.html
That’s a very good question and I think a most crucial one for investors because it has everything to do with the sectors where you invest
your money. I put together my Inflation/Deflation Watch (IDW), which is largely comprised of leading
indicators such as stocks from most of the major sectors and countries around the world. Also in my
IDW are commodities, currencies and bond prices as well as gold/silver and gold/commodities ratios. At the moment, we
are seeing some relief of the deflationary pressures that commenced last fall with the collapse of Lehman Brothers.
However, I think this bounce up, which Dr. McHugh labels as the “B-Wave up,” following the initial “A-Wave down last fall, is merely
a natural correction of last autumn’s decline. So now, we are in this "B-Wave up" that McHugh expects will
continue probably up to or around the third week in September. Following that we believe all
hell could break loose to the downside in the equity markets. We say that because most of
what is driving this current bounce higher is artificial and based on the speculation of “green
shoots” and not much more. There are huge amounts of money that have been pumped into the banking system from all these
bailouts. But this move higher has only been a result of professional speculation. Market pros have to put their money to work in one
way or another, or they lose their jobs. So you have pension fund managers, hedge fund managers, and the mutual fund guys having to
do something with the money they have as per the stated purpose of their funds. So stock and commodity prices have risen
during this “B-Wave up.” But unless we see end demand from consumers and sustainable global
economic growth, I don’t think this is going to continue because there will be no “fuel” to keep yet
another bubble suspended. So this autumn, we suspect we will get yet another market
disaster, this one being even worse than last autumn . The real problem is the American consumer. He is
flat on his back. That had been predicted for many, many years, but he just kept on spending and the reason he kept on spending is
because, compliments of the Federal Reserve, liquidity was pumped into the system. So banks mindlessly lent to consumers
until a debt-bloated consumer “asphyxiated” himself. Can the Chinese pick up the slack caused by the
death of the American consumer? Perhaps in time they can, but they clearly are not able to do that yet
and we’re seeing signs in China of some very, very major socio-economic problems there as well. And I
think we are going to see some more big problems in the housing market and the commercial real estate sector is reportedly in big
trouble. I don’t see the growth in jobs in general manufacturing in the United States. Those basic wealth-creating jobs in the U.S. are
basically gone. So I think the global economy has a huge adjustment process ahead and it’s going to mean that the West is going to be
less well off; it’s going to be a readjustment of relative wealth toward the East. However, that process is just beginning. China and other
developing countries are a long ways from consuming enough to make up for a lost American consumer. So I think
fundamentally, things are playing out for Dr. McHugh’s “C-Wave down” that he describes as a
“cataclysmic nation-changing event to correct the bull market that started in 1718!”
Link Turn: social service spending will create economic growth
George Trefgarne, Economics Editor “Social services boost economic growth” May 25, 2005
http://www.telegraph.co.uk/finance/2916267/Social-services-boost-economic-growth.html
A surprise doubling in growth of social services' output was announced yesterday by the Office for National
Statistics, as part of a review of public service productivity that could add 0.5% to the growth of government output
over the past decade. Any adjustment to the output of public services is bound to be politically contentious as
Gordon Brown, Chancellor, has embarked on a large spending programme which has led to accusations that vast
sums have been wasted. Yesterday's changes alone could add 0.1pc to the growth of GDP over the past few years.
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Link turn- In times of economic downturn, government spending increases growth
Calbreath, Union-Tribune Staff Writer February 1, 2009 David Calbreath, “Government spending is tool to revive
the economy” The Union-Tribune is a California-based newspaper reporting on national and local issues. The
newspaper has won numerous awards over the years, including four Pulitzer Prizes.
http://www3.signonsandiego.com/stories/2009/feb/01/1b1dean185149-government-spending-tool-revive-econ/
As politicians on Capitol Hill debate how much money to pour into the latest stimulus package, they may take heart
from the findings of a recent study from the University of California San Diego, which suggests that government
spending programs can be very useful in revitalizing the economy. In a year-old study now being updated to reflect
the ongoing economic crisis, UCSD economist Valerie Ramey took a look at government spending programs from
the Eisenhower era through the Sept. 11 terrorist attacks. Her conclusion: For every $1 the government spent, it
generated an average of $1.40 in economic growth. “Raising spending stimulates the economy,” Ramey said. “On
average, government spending raises the gross domestic product and raises employment, although it sometimes
leads to a small decrease in consumer spending, as consumers find themselves in competition with the government.”
Over the past two months, the stimulus package – created to revive an economy laid low by the mortgage crisis –
has evolved from a near-record $700 billion proposal to a leviathan between $819 billion and $888 billion,
depending on whether you're looking at the House or Senate version. Many economists say even that will not be
enough to revive the economy. As originally envisioned, the package was aimed at infrastructure construction and
bolstering state and local budgets, with the goal of creating or preserving 3 million jobs through 2011. That
continues to be the core of the bill, but now embedded within in its 647 pages are proposals to devote millions of
dollars to funding the National Endowment for the Arts, revamping the Department of Commerce headquarters,
rebuilding restrooms in national parks and buying new computers for government agencies, among other things.
Although critics describe some of those proposals as “pork” projects, supporters of the bill say they will create jobs
and stir economic growth, which is the point of the bill. To assuage some critics – and to fulfill Obama's campaign
promises – the bill also includes $275 billion in tax cuts, including reductions to the alternative minimum tax,
income taxes and corporate taxes. But several studies last week agreed with Ramey's findings at UCSD: In times
like these, the most important step the government can take is to spend. “A massive hole in demand is emerging as
consumers, businesses, and state and local governments are forced to cut back,” said Nigel Gault, chief U.S.
economist at IHT Global Insight, an economic analysis firm in Massachusetts. “The federal government is the only
entity that can fill that gap, either by spending itself or by providing the financing for spending in the rest of the
economy.” In a report last week, Gault compared the benefits of three elements of the stimulus proposal: tax cuts,
infrastructure spending and transfers of federal funds to state and local governments. Gault found that the most
effective use of the money would be spending on infrastructure projects, generating $1.70 in economic activity for
every $1 spent. “This should not be surprising, since the spending creates GDP both directly, by putting idle
resources to work, and indirectly, since those businesses and workers receiving extra income will then be able to
spend more,” he said. Transfers to state and local governments would generate $1.40 for every $1 spent, he said,
partly by preventing further job losses.
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Perception is Non Unique
Perception is that the economy and the dollar are tanking
LOCHHEAD 5 - 24 - 09 San Fran Chronicle Washington Bureau
[Carolyn, "Government debt swells as choices get harder," http://www.sfgate.com/cgibin/article.cgi?f=/c/a/2009/05/23/MN2B17PDPL.DTL]
The market reactions highlight a growing disconnect between the Obama administration's ambitious spending plans,
including a $1.5 trillion overhaul of the nation's health care system, and the money available to do it.
As if to underline the point, the Social Security and Medicare trustees, who include three Obama Cabinet officials,
issued their report saying the finances of the two bedrock social programs are dire.
"We are heading toward very high debt-to-GDP ratios very soon," said UC Berkeley economist Alan
Auerbach. He said the rise in perceived risk of the federal government going bankrupt is sobering.
As it is, the United States does not even meet the standards for admission to the European Union, because its deficit
and debt levels are too high, said Sen. Judd Gregg, the top Republican on the Senate Budget Committee. The federal
government faces either enormous tax increases or inflation (regressive taxation in another form), to remedy the
problem, he said. "That means people, instead of having money to buy a home, have to send it to the government to
pay the interest on the debt," Gregg, R-N.H., said in an interview. "There are no ways around this. This is not
academic. It's not theoretical. It's real. The numbers are there."
Investor freak out inevitable – just a question of when
LOCHHEAD 5 - 24 - 09 San Fran Chronicle Washington Bureau
[Carolyn, "Government debt swells as choices get harder," http://www.sfgate.com/cgibin/article.cgi?f=/c/a/2009/05/23/MN2B17PDPL.DTL]
The appetite for U.S. debt has remained robust, and Treasurys were viewed as a safe haven amid the
financial turmoil last fall. Budget analysts have been warning about the sorry condition of the county's
finances for years, and nothing happened. But the United Kingdom credit warning has turned many eyes
suddenly to the United States. "Nothing happens until it does," said Auerbach. "People were warning about
the housing market and the bubble and nobody seemed to worry about that, and now a lot of us are sorry. The
United States can go on for several more years doing absolutely nothing responsible to get the debt under
control and things may be fine, but at some point, and it's impossible to predict when, people can
lose confidence in the U.S. government's ability to deal with its problem, and things can
unravel. Whether that happens in five years or 10 or even longer, it's impossible to say." The idea that
something very bad will happen is now a consensus view among budget experts. Country at risk "Our
creditors are beginning to ask questions, and it's only a matter of time before something bad happens," said
Saw-hill. "None of us can predict exactly when or exactly what, but we know that we're putting ourselves in
very high-risk situation as a country." Even House Majority Leader Steny Hoyer, the top lieutenant to
Speaker Nancy Pelosi, said this month, "If a fiscal meltdown comes, there will be no one to bail out
America." So far, there is little indication that Washington is taking the issue seriously, other than
talking about it. President Obama said several days ago in announcing $17 billion in proposed budget savings
that "we can no longer afford to leave the hard choices for the next budget, the next administration or the
next generation." But $17 billion is a grain of sand in the roughly $60 trillion in unfunded liabilities the
federal government carries.
LAG
Towson Debate
6/20/17
71/77
Dollar DA
Spending is non unique
Obama won’t create fiscal discipline
FINANCIAL TIMES 5 - 22 - 09
http://www.ft.com/cms/s/0/bdd23cb0-4639-11de-803f-00144feabdc0.html
Mr Orszag said he did not see any need for further fiscal stimulus. But he did not rule out a second stimulus to
sustain support when the first fades in 2011, imposing a drag on growth.
“There is no active discussion of a second stimulus,” he said. “But we have always said we will see how things
play out. There is really no alternative other than to continue carefully monitoring the situation.”
Mr Orszag’s comments come amid concern that the Obama administration – which estimates the deficit will
hit a record $1,840bn (€1,325bn, £1,160bn) this financial year – will fail to restore fiscal discipline once the crisis
is over. Congressional Budget Office estimates suggest that under administration policies the US will have a
medium-term structural deficit (the deficit when the economy is operating at full potential) of roughly 5 per
cent of gross domestic product.
Future spending inevitable – Obama’s plans
WEISENTHAL 5 – 15 – 09 Editor of ClusterStock – online Financial Source
[Joe, “Obama Warns Of "Unsustainable" Deficits And Spiraling Interest Rates,”
http://www.businessinsider.com/obama-warns-of-unsustainable-deficits-and-spiraling-interest-rates-2009-5]
The good news is that President Obama is apparently deeply concerned about our level of deficit spending
and the reliance on foreign governments. Bloomberg: “We can’t keep on just borrowing from China,” Obama
said at a town-hall meeting in Rio Rancho, New Mexico, outside Albuquerque. “We have to pay interest on
that debt, and that means we are mortgaging our children’s future with more and more debt.” Holders of U.S.
debt will eventually “get tired” of buying it, causing interest rates on everything from auto loans to home
mortgages to increase, Obama said. “It will have a dampening effect on our economy.” The bad news is that
Obama's solution most likely revolves around higher taxes, a strategy that's not only likely to depress
growth, but one that probably won't close the gap as much as the government thinks it will. As it is, the
government has all kinds of new spending increases on the way in areas like healthcare, the second
stimulus, the further bailouts, etc. Any plans to cut spending appear to be pretty minimal.
Now granted, it's not like the rich can't afford to pay higher taxes. Paying what they did under the Clinton
administration isn't some form of socialism or class warfare. But the economy's changed in big ways, and one
of those has been the violent collapse of many of the formerly rich (aka: high tax bracket folks). And though
the government will keep looking for places to hoover up dollars (offshore earnings, carried interest, cap &
trade, a traders tax) it's unlikely to add up to enough, especially as each one has its own depressing effect.
Still, we appreciate the concern. Our question is: If (if) the tax revenues don't come in as planned, will there
be any willingness to cut spending so as not to mortgage our children's future?
LAG
Towson Debate
6/20/17
72/77
Dollar DA
No link- spending does not = inflation
No link- Non-military spending doesn’t cause inflation- All their arguments use outdated
logic
Mulligan 09 [Casey B. Mulligan, economics professor @ University of Chicago, “Inflation and
Government Spending,” June 10 http://economix.blogs.nytimes.com/2009/06/10/inflation-andthe-size-of-government/]
The federal government is spending a lot these days, and going deeply in debt. Although it is
easy to imagine high inflation as a consequence of excessive government spending, inflation
rates and government spending are weakly correlated, if correlated at all. John Maynard
Keynes wrote the most important and insightful economics book ever — “The Economic
Consequences of the Peace” — successfully predicting an instance in which excessive
government spending would create inflation, and worse. Published shortly after World War I,
the book analyzed the economic capacity of Germany, and explained how it was not nearly
enough for the German government to pay the debts (“reparations”) imposed on her by the
Allied powers’ Treaty of Versailles. Dire political and economic consequences would result
from the excessive debt burden created for Germany by the Treaty of Versailles, Keynes
wrote. The Allied powers did not reduce the reparations nearly as much as Keynes
recommended; the German economy and polity subsequently produced hyperinflation, the
Holocaust and violent contributions to World War II. The Bush and Obama administrations have
added, and continue to add, much to the United States’ national debt. Both Republicans and
Democrats spend too much of taxpayers’ money, but excessive government spending does not
mean that inflation will necessarily — or even probably — follow. The Treaty of Versailles
gave Germany debts that amounted to years of the nation’s gross domestic product,
whereas 2008-9 bailout mania has so far given us debt that amounts to “only” several
months’ G.D.P. Moreover, thanks to the emergence of payroll taxation and income tax
withholding, the capacity of governments to tax its citizens without resorting to inflation is
much greater than it was before World War II. Neither inflation nor war will be needed to
settle the debts that Presidents Bush and Obama are giving us. Last year the Federal Reserve
Board’s Song Han and I published a study of 80 countries where we looked at the correlation
between inflation and government spending. We found inflation to be similar (or even somewhat
less) in countries whose governments spend more for nonmilitary purposes as compared to
countries whose governments spent less. Our study found significant positive correlations
between inflation and government spending only in cases when military spending grew —
as it does during wartime. But the government spending growth we have seen in 2008 and
2009 comes from the nonmilitary part of the budget.
LAG
Towson Debate
6/20/17
73/77
Dollar DA
No Impact-no risk of One-Day Collapse
The one-day collapse impact the neg describes is absolutely improbable: four reasons
Lynn, Matthew is a business journalist. 07 “Why the big one-day collapse should never happen again.” The
Business, 20 October 2007. Lexis Nexis. Accessed on June 23, 2009.
So could we see another crash? In truth, probably not. Although stock markets are by nature superstitious, there are
good reasons why they have managed to chalk up two decades without repeating the calamitous one-day falls they
saw in October 1987. There will still be plenty of bear markets but the chances are we will never see a similar oneday fall again. Black Monday made the recent credit crunch look like a mere blip on the charts. On that day, the
Dow Jones Industrial Average dropped by 22% in a single trading session. It wasn’t quite the largest one-day fall
ever recorded on the Dow Jones: the index dropped by 24% on 12 December 1914, but that was the first trading day
after the opening shots of World War One were fired, a good excuse for knocking down share prices a bit. Of
course, the crash was not just restricted to New York. Black Monday was a global meltdown. By the end of October,
stock markets in Hong Kong had fallen by 45%, in Australia by 41%, in Spain by 31%, in Britain by 26%, and in
North America by 22%. It was significantly worse than the stock market crash of 1929 when the markets only fell
by 12% in a single day but fears that the collapse was the likely trigger to another global recession prompted central
bankers to cut interest rates fast. Indeed, much of the economic story of the next decade was a response to that
collapse. There are four reasons for thinking a one-day collapse on that scale is unlikely today. First, information
systems are much better. The crash started in London, where the City was practically empty because of a storm that
had whipped through the South East of England. Nobody knew what was happening. You still get storms, but they
do not freeze the markets and there is less scope for a global panic. Valuation models have become more
sophisticated. For share prices to change 25% in a single day tells us their valuations must have been radically
wrong either the day before or the day after the crash; those kinds of mistakes are now less likely to be repeated.
Two, there are more counterparties. Twenty years ago, the markets were dominated by long-only, low-risk funds.
Now, there is a far greater variety of financial instruments and funds, all with a lot more flexibility. Many people
still like to complain that hedge funds and derivatives have made the markets more dangerous, but the evidence
points in the other direction. As hedge funds grow in power, the markets have become more stable, not less. If the
markets plunged even 10% in a day now, a lot of hedge funds would start buying, and that would put a floor under
prices. Three, the trading systems are better. In the wake of Black Monday, much of the blame was pinned on newfangled computerised trading. Relatively small drops in the index generated waves of automatic selling, which no
one could get under control. Computers are still dumb, of course: look at the way a few quant funds that use
computer models to trade on got into trouble following the credit crunch this summer. But the computers and
programmes have become more sophisticated. Four, the central banks are more accommodating. In fact, 1987
marked the beginning of the so-called Greenspan put , referring to the way the former Federal Reserve chairman cut
rates when markets fell. If central banks allowed a market collapse to lead to recession, it made sense to keep on
selling once the decline started. If a market correction prompts rate cuts, as they have since 1987, it is a reason to
start buying once the market dips. None of which is to say we will not see another bear market. The collapse in
share prices from 2000 to 2003 when the FTSE 100 fell from 6,798 down to 3,297 was far worse than anything that
happened in 1987. But the big one-day collapse? Thankfully, it looks to have been consigned to history.
LAG
Towson Debate
6/20/17
74/77
Dollar DA
Economic decline leads to increased productivity- this will prevent any decline from
turning into an all out collaspe
Mead 09, Walter Russel, is the Henry A. Kissinger Senior Fellow in U.S. Foreign Policy at the Council on Foreign
Relations. “Only Makes You Stronger: Why the Recession Bolstered America.” The New Republic, 4 February
2009. <http://www.tnr.com/politics/story.html?id=571cbbb9-2887-4d81-8542-92e83915f5f8&p=2>
Every crisis is different, but there seem to be reasons why, over time, financial crises on balance reinforce rather
than undermine the world position of the leading capitalist countries. Since capitalism first emerged in early modern
Europe, the ability to exploit the advantages of rapid economic development has been a key factor in international
competition. Countries that can encourage--or at least allow and sustain--the change, dislocation, upheaval, and pain
that capitalism often involves, while providing their tumultuous market societies with appropriate regulatory and
legal frameworks, grow swiftly. They produce cutting-edge technologies that translate into military and economic
power. They are able to invest in education, making their workforces ever more productive. They typically develop
liberal political institutions and cultural norms that value, or at least tolerate, dissent and that allow people of
different political and religious viewpoints to collaborate on a vast social project of modernization--and to maintain
political stability in the face of accelerating social and economic change. The vast productive capacity of leading
capitalist powers gives them the ability to project influence around the world and, to some degree, to remake the
world to suit their own interests and preferences. This is what the United Kingdom and the United States have done
in past centuries, and what other capitalist powers like France, Germany, and Japan have done to a lesser extent. In
these countries, the social forces that support the idea of a competitive market economy within an appropriately
liberal legal and political framework are relatively strong.
LAG
Towson Debate
6/20/17
75/77
Dollar DA
Aff- Link Turn ext
Social Services counter inflation.
Harvey, 02
Philip Harvey, Associate Professor of Law & Economics, Rutgers School of Law - Camden. J.D., Yale Law School;
Ph.D., New School for Social Research; B.A., Yale College., Spring, 2002, HUMAN RIGHTS AND ECONOMIC
POLICY DISCOURSE: TAKING ECONOMIC AND SOCIAL RIGHTS SERIOUSLY, Columbia Human Rights
Law Review, https://www.lexisnexis.com/us/lnacademic/search/journalssubmitForm.do, accessed 7/2/09
The policy of using transfer benefits to reduce the negative effects of joblessness has been
pursued in the United States, although [*446] not to the same extent as in Europe. n234 Criticism of such
programs focuses on their negative effect on the work incentives of recipients. n235 However, to the extent that the
quantity of joblessness is determined by the level of aggregate demand rather than by the job
search behavior of unemployed workers, the behavioral effects of transfer benefit programs
mainly affect the distribution of joblessness rather than its aggregate level. n236 Recipients of
such benefits may be likely to experience more joblessness than persons who do not receive such
benefits, but the total amount of joblessness in the economy may not be affected. This is a bad thing, of
course, only if we think that the recipients of such benefits should be working. The New Deal's funding of Old Age Assistance benefits for
the elderly poor undoubtedly reduced the work effort of the recipient population, but that was not
perceived to be a problem, because one of the goals of the program was to reduce the number of
people competing for scarce jobs. When the Aid to Dependent Children (ADC) program - predecessor to AFDC and the
Temporary Assistance for Needy Families (TANF) program - was established in the same legislation, the likely effect of the program on recipient
work effort was not a cause for concern, because one intent of the program (like Old Age Assistance) was to facilitate the withdrawal of
recipients from the labor force. n237The
New Dealers preferred to provide income assistance to persons who
were expected to work in the form of a job - in work relief programs like the Civilian Conservation Corps (CCC) or the
Works Progress Administration (WPA). The only exception to this rule was Unemployment Insurance (UI), but UI benefits were made [*447]
available for only a short period of time (twenty weeks in the original legislation), were limited to workers with an established work history who
were laid off from their jobs, and were structured to resemble an earned benefit rather than means-tested public assistance. This type of benefit
might be considered a reasonable way to reduce individual economic stress associated with frictional unemployment, even in an economy
operating at full employment.
It was not designed to offer gratuitous transfer benefits as a substitute for a
job.
When covered workers exhausted their UI benefits, New Deal social welfare planners assumed that continued public aid should be
provided in the form of work relief, in contrast to the general practice in Europe of offering reduced, means-tested direct relief benefits to
unemployed workers who have exhausted their unemployment insurance benefits. n238 The latter practice is still the predominant one in Europe,
but increasingly the Swedish strategy of offering continued aid only in exchange for work or as a stipend for participation in an intensive training
program is being followed. n239 In countries that offer long-term gratuitous income assistance to jobless workers, average unemployment spells
are much longer than in countries like the United States (which offers little or no long-term assistance to jobless workers) or Sweden (which
offers long-term assistance only in conjunction with work or training). n240 This means that in the typical European country today, fewer
individuals experience joblessness at a given rate of unemployment than in the United States, but those who do experience it endure longer spells
(while receiving income supplements that are very generous by American standards). The problem with the American strategy of denying or
severely limiting income assistance benefits for able-bodied individuals is that it has the undesirable consequence of visiting intense harm on jobseekers who do not manage to find employment quickly, but there also are problems with the European strategy of providing long-term income
First, even if the strategy secures recipients from material
deprivation, it [*448] does not protect them from all the non-pecuniary harms of joblessness
which, as noted above, can be substantial. Second, by fostering long-term joblessness, it makes it
more difficult for recipients to reenter the active labor force when economic conditions improve.
As their spell of unemployment lengthens, the long-term unemployed are likely to become
progressively less attractive to potential employers. Third, as the long-term unemployed become
steadily less competitive in the struggle for available jobs, their presence in the labor market may
lose its anti-inflationary effect. If inflationary tendencies associated with low rates of
unemployment are a function of the relative bargaining power of employers and employees at
different levels of unemployment, the presence in the labor market of job-seekers who lack
credibility as alternative candidates for employment are not going to affect the relevant balance
of power.
assistance benefits to jobless individuals.
LAG
Towson Debate
6/20/17
76/77
Dollar DA
Aff- Impact Turns – Inflation Good for the Economy (1 of 2)
The economy would be even worse with zero inflation.
Mike Norman, 12/13/06 [“The Misunderstood Inflation Monster” from The Motley Fool: To Educate,
Enrich, and Amuse. Professor at UC Davis. http://www.fool.com/personal-finance/general/2006/12/13/themisunderstood-inflation-monster.aspx]
On the other hand, a world without inflation would be as brutal and unforgiving as the
atmosphere of Venus -- economically speaking, anyway. Most assets would decline in value, and
business profits would evaporate, along with any chance of gainful employment. The only
people who would benefit would be creditors, and then only if they were lucky enough to find
people who wanted to borrow their money. That would be doubtful, since business and
investment opportunity would be nil, providing little reason to be a borrower. The belief that
inflation is harmful stems from the perception that a halt to rising prices would help one's
individual income go further. However, this scenario disregards the accompanying consequences
for income. If inflation were zero, or if prices were actually falling (a condition known as
disinflation or deflation, depending on the severity), business profits would fall, too. After all, in
a competitive economic environment, price gains normally tend to be limited. This forces
businesses to earn money by cutting costs and being more productive. Labor costs would
certainly be among the costs businesses would want to reduce, which would cause hiring to
stagnate or fall along with individuals' income.
Deflation is much worse then inflation.
Leeb 6/23/09
Dr. Stephen Leeb, the editor of The Complete Investor newsletter, June 23 2009, Inflation: As Inevitable as
Death and Taxes, Seeking Alpha, http://seekingalpha.com/article/144755-inflation-as-inevitable-as-death-andtaxes, accessed 7/3/09
What's more, inflation remains the more palatable of the two. A nation can endure high inflation for a time
without destroying its long-term economic prospects. For example, after World War II, Japan
experienced inflation on the order of 40% annually for several years. Yet it segued from that
ordeal to become an economic juggernaut for much of the seceding decades.
Similarly, high inflation plagued Brazil during the early 1990s. Yet today Brazil is one of the strongest emerging
economies. The U.S. can only envy its growth rate. Warren Buffett, moreover, has singled out Brazil's currency as
one he would like to invest in.
On the other hand, economic depressions have far more severe aftereffects and require more drastic measures to
solve. It took over ten years for the U.S. economy to recover from the Great Depression that began in the early
1930s – and even then it was only the massive spending and industrialization necessary to fight WW2 that caused
growth to reach 15% that pulled us out of our slump.
Similarly, many people don't realize that the hyperinflation which plagued Germany in the 1920s was a short-lived
phenomenon. While the suffering it caused may have contributed to the rise of Hitler, it was really the hardship of
the 1930s depression that gave the biggest boost to the Nazis' careers.
People can adjust to and even weather high inflation – even double-digit inflation, because high
inflation does not necessarily destroy the social structure. As long as the social structure remains intact,
measures can be taken to improve the economy, reduce future inflation, and set the stage for a healthier economy.
Depression, however, can destroy the social structure, making it difficult to invest in solutions.
In our situation today, high inflation would clearly be the lesser of the two evils. It might chasten us
to aggressively develop alternative energies. More plentiful energy would then free us from future inflation caused
by dwindling oil supplies.
LAG
Towson Debate
6/20/17
77/77
Dollar DA
Inflation bad, deflation worse
From The Economist print edition May 7th 2009
(http://www.economist.com/displaystory.cfm?story_id=13610845)
Accessed July 3, 2009
There is something to both fears. But
inflation is distant and containable,
while deflation is at hand
and pernicious
Fears about deflation do not rest on the 0.4% decline in American consumer prices in the
year to March. Although this is the first such annual decline since 1955, it is the transitory
result of a plunge in energy prices. Excluding food and energy, core inflation is 1.8%.
Rather,
the worry is of persistent price declines that characterise
true deflation. With unemployment nearing 9%, economic output is further
below the economy’s potential than at any time since 1982. This
gap is likely to widen. House prices are not part of America’s inflation index but their decline
is forcing households to reduce debt (see article), which could subdue economic growth for
years. As workers compete for scarce jobs and firms underbid each other for sales, wages
and prices will come under pressure.
Does this matter? If prices are falling because of advancing productivity, as at the end of
Today, though,
deflation is more likely to resemble the malign 1930s sort than
the 19th century, it is a sign of progress, not economic collapse.
that earlier benign variety, because demand is weak and households and firms are
In deflation the nominal value of debts remains
fixed even as nominal wages, prices and profits fall. Real debt
burdened by debt.
burdens therefore rise, causing borrowers to cut spending to service their debts or to
default.
That undermines the financial system and deepens the
recession.
Fair enough, but inflation is easier to put right than deflation.
A
central bank can raise interest rates as high as it wants to suppress inflation, but it cannot
Deflation robs a central bank of its ability
to stimulate spending using negative real interest rates. In the
worst case, rising debts and defaults depress growth, poisoning the
economy by deepening deflation and pressing real interest rates higher.
cut nominal rates below zero.
Central banks that have lowered rates to nearly zero are now using unconventional,
erring on the
side of inflation would be less catastrophic than erring on the
side of deflation.
quantitative tools, but their efficacy is unproven. Given the choice,
LAG