As you may be aware, MoveOn is doing events on Thursday on job losses from the Ryan budget in the context of Romney-Ryan.
"Ryan's proposed budget would cost America more than a million jobs in less than one year and tank the economy." http://moveon.org/event/events/index.html?action_id=285 They are basing this number on an EPI analysis of the Ryan budget: Ryan’s budget cuts would cost jobs http://www.epi.org/blog/paul-ryan-budget-discretionary-cuts-cost-jobs/ Presumably, some part of the story here is the Bob Pollin et al story on the differential multiplier of military vs. domestic spending, because the Ryan budget takes all spending cuts from the domestic side, compared to Obama. Although the EPI analysis says that it is compared to the CBO baseline, not Obama. A Ryan v. Obama comparison on 10-year military spending is here: National Priorities Project: Ryan Pick Solidifies Competing Visions in Federal Budget Debate http://nationalpriorities.org/blog/2012/08/13/ryan-pick-solidifies-competing-visions-federal-budget-debate/ How much of the MoveOn/EPI jobs story is attributable to that difference in military vs. domestic multiplier? The main Dem line is emphasizing domestic budget cuts and submerging the military spending story. I would like to raise up the military spending part. EPI has an explanatory note which talks about multipliers: Method memo on estimating the jobs impact of various policy changes http://www.epi.org/publication/methodology-estimating-jobs-impact/ But I don't see anything there that would enable military to domestic comparison. In the December 2011 Pollin paper, $1 billion in military spending creates 11,200 jobs, whereas $1 billion in domestic spending creates at least 15,100 jobs by the least job-creation-efficient means (tax cuts for personal consumption.) THE U.S. EMPLOYMENT EFFECTS OF MILITARY AND DOMESTIC SPENDING PRIORITIES: 2011 UPDATE http://www.peri.umass.edu/fileadmin/pdf/published_study/PERI_military_spending_2011.pdf Here's the EPI punchline: "Against a current policy baseline, [meaning, apparently, CBO] the budget cuts discretionary programs by about $120 billion over the next two years and mandatory programs by $284 billion, sucking demand out of the economy when it most needs it and leading to job loss. Using a standard macroeconomic model that is consistent with that used by private- and public-sector forecasters, the shock to aggregate demand from near-term spending cuts would result in roughly 1.3 million jobs lost in 2013 and 2.8 million jobs lost in 2014, or 4.1 million jobs through 2014. Of course, this leaves out taxes..." http://www.epi.org/blog/paul-ryan-budget-discretionary-cuts-cost-jobs/ Roughly speaking, Ryan cuts twice as much from the domestic side as the sequester over ten years (NPP above.) So to be crude, let's try to ignore taxes (EPI apparently does in the blurb above) and say the two worlds are Ryan domestic cuts vs. 1/2 of Ryan domestic cuts moved to military. OK, so I'd like to match EPI world to Pollin world. In EPI world, cutting $404 billion in domestic spending destroys 4.1 million jobs. That suggests that $1 billion in domestic spending creates about 98,500 jobs. In Pollin world, the most job-creation-efficient domestic expenditure of $1 billion creates 26,700 jobs. Acknowledging that things are sloppy, this seems like a big difference, factor of 4. What explains it? Putting that to the side for a moment... The CBO baseline is not, in a way, a realistic comparison, because no-one in debate is proposing to do the CBO baseline as their policy. What if the alternative proposal is: to reduce the deficit as much as Ryan's domestic cuts (generally, the Washington debate doesn't contest the premise of cutting the "combined budget" deficit) but take half of this from military spending, and the other half from "somewhere else," either domestic cuts or revenue increases. Now one wants to replace the EPI number with a number that reflects how it would change if the mix of "cuts" changes. Even putting to the side the issue of taxes, and different ways of domestic spending, we're obstructed by the fact that the EPI and Pollin job creation numbers don't match. But suppose we let "tax cuts for domestic consumption" equal all non-military-cut ways the government can withdraw money from the economy through taxes and spending cuts - a very conservative assumption (if you could tax the money in Romney's offshore accounts, that's all gravy.) And let's suppose that the EPI numbers are right in absolute terms, and that the Pollin numbers are right in relative terms. Under Pollin, every time you move a billion dollars from the military budget to the domestic budget, you create at least 3,900 jobs. If you replace a $1 billion cut to the domestic budget with a $1 billion cut to the military budget, then instead of destroying at least 15,100 jobs, you only destroy 11,200 jobs. Thus, you reduce the job loss by at least 25.8%. So, if you replace half the Ryan domestic cuts with military cuts, then you should reduce the job loss by at least 12.9%. So, compared to the EPI analysis of the Ryan plan, you should save at least 530,000 jobs. And this assumes that domestic government spending is no more efficient at job creation than tax cuts for personal consumption, and that any tax/revenue increase would take as much money out of workers' pockets as the payroll tax - very conservative assumptions. Therefore, at least 530,000 of the 4.1 million "through 2014" EPI figure is attributable to the fact that Ryan proposes to cut only domestic spending and refuses to cut military spending. Alternatively, if one is going to say that the Ryan budget would cost at least a million jobs in 2013, then at least 120,000 of those job losses are due to the fact that Ryan only proposes to cut military spending, not domestic spending. What's your take on all this? -- Robert Naiman Policy Director Just Foreign Policy www.justforeignpolicy.org [email protected] _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
