Spending File

8/14/2019 Spending File

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BAYLOR Debate Institute 08 SPENDING DA

INDEX1NC SHELL.............................................................................................................................................................31NC SHELL.............................................................................................................................................................41NC SHELL.............................................................................................................................................................5UNIQUENESS: RESTRAINT NOW.....................................................................................................................6.................................................................................................................................................................................6

UNIQUENESS: RESTRAINT NOW.....................................................................................................................7UNIQUENESS: RESTRAINT NOW.....................................................................................................................8.................................................................................................................................................................................8

UNIQUENESS: DEFICIT INCREASING.............................................................................................................9...............................................................................................................................................................................10

2NC LINK: LOW PRIORITY PROGRAMS.......................................................................................................10LINK EXTENSIONS: LOW PRIORITY PROGRAMS.......................................................................................11...............................................................................................................................................................................11

LINKS: OFF BUDGET SPENDING...................................................................................................................12...............................................................................................................................................................................12

DEFICITS THREATEN THE ECON....................................................................................................................13FISCAL DISPLINE KEY......................................................................................................................................14...............................................................................................................................................................................14

INTERNAL LINK EXTENSIONS.......................................................................................................................15INTERNAL LINK EXTENSIONS.......................................................................................................................16

NO NEW SPENDING INTERNAL LINK EXT................................................................................................17INTERNAL LINK: SPENDING HURTS ECON................................................................................................18INTERNAL LINK: SPENDING HURTS THE ECONOMY..............................................................................19US KEY TO GLOBAL ECON..............................................................................................................................202NC INFLATION MPX MODULE......................................................................................................................21IMPACT EXTENSIONS.......................................................................................................................................22IMPACT EXTENSIONS.......................................................................................................................................23IMPACT: DA TURNS CASE...............................................................................................................................24...............................................................................................................................................................................24

A/T: PAST SPENDING EMPIRICALLY DENIES DISAD................................................................................25...............................................................................................................................................................................26

A/T: SPENDING GOOD TURN..........................................................................................................................26A/T: SPENDING GOOD TURN...........................................................................................................................27A/T: SPENDING GOOD TURN..........................................................................................................................28AFF: NON-UNIQUE NO RESTRAINT NOW................................................................................................29AFF: NON-UNIQUE SPENDING NOW.........................................................................................................30AFF: NO INTERNAL DEFICITS NOT KEY...................................................................................................31...............................................................................................................................................................................32

AFF: NO INTERNAL EMPERICALLY DENIED...........................................................................................32AFF: NO INTERNAL US ECON NOT KEY TO WORLD ECON..................................................................33...............................................................................................................................................................................33

AFF: NO MPX ECON COLLAPSE NOT CAUSE WAR................................................................................34AFF: 2AC SPENDING GOOD TURN.............................................................................................................35AFF: SPENDING GOOD TURN EXTENSIONS................................................................................................36AFF: SPENDING GOOD TURN EXTENSIONS...............................................................................................37AFF: SPENDING GOOD TURN EXTENSIONS...............................................................................................38

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AFF: SPENDING GOOD TURN: UNIQUENESS ISSUE.................................................................................39

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1NC SHELL

A) UNIQUENESS: BUSH PUSHING SPENDING RESTRAINT IN THE STATUS QUO

Dow Jones, May 23, 2008

A day after Congress overrode his veto of a nearly $300 billion farm bill, U.S. President George W. Bush saidfiscal conservatism will define the remainder of his time in office. In an interview with the Fox Business

Network, Bush said lawmakers who pushed the farm bill through Congress - a group that includes manyRepublicans - are more concerned with politics than the U.S.'s fiscal health. He vetoed the measure because hethought it was too costly and gave unneeded subsidies to wealthy farmers already enjoying soaring commodity

prices. "Fiscal conservativism is one of my defining issues for the remaining months. I am deeply disappointedin the Congress on the farm bill," Bush told Fox Business. "I'll stand strong for the taxpayers for the remainder of my time here."

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1NC SHELLB) LINKS:

1. THE PLAN IS A NEW SPENDING PROPOSAL THAT OCCURS AFTER THE BUDGET DEAL WASREACHED. THE UNTOUCHABLE NATURE OF THE PLAN FRAGMENTS THE BUDGET

PROCESS UNDERMINING FISCAL DISCIPLINE.

Greenspan, 96 (Former FRB Chairman, 4-17, CONGRESSIONAL RECORD, 142 Cong Rec H 3497)

On behalf of myself and the other members of the Board, I am pleased to respond to your letter of September 26requesting comment on proposals to move the transportation trust funds off-budget. As a general matter, it has

been the practice of the Board not to take positions on the details of the individual tax and spending issues thatare before the Congress. However, the shifting of certain spending categories off-budget raises some broader concerns, with implications for discipline and control over federal outlays. Notably, moving some spendingcategories off-budget would lead to fragmentation of the budgeting process and would detract from the unified

budget as an indicator of the government's fiscal operations and hence of the impact of the U.S. budget on credit

markets and the economy. Moreover, it could weaken the ability of the Congress to prioritize and controlspending effectively. As the letters from OMB Director Rivlin and former-OMB Director Miller make clear, responsible budgeting requires a comprehensive framework for setting priorities and assessing competing claims on national resources. Theunified budget, as commonly presented to include the social security trust funds, combines all fiscal transactions in one place. It thushelps policymakers and the public understand the trade-offs among government programs, and between public and private spending.Moreover, as the focal point of the budget process, it places individual programs on a more comparable footing as they compete for federal funding and thus helps the President and the Congress to resolve competing demands on the nation's resources. Moving

programs off-budget raises the risk that resource trade-offs would become obscured and could engender cynicism in financial markets and the public at large about the commitment and ability of the government tocontrol federal spending.

2. FISCAL DISCIPLINE AND ADHERENCE TO BUDGETARY RULES ARE CRITICAL TOREDUCING DEFICITS AND PREVENTING A FLOOD OF NEW SPENDING.

Cohen, 07 (The Concord Coalition, May 17, http://www.concordcoalition.org/press/2007/070517release-budgetconference.htm)

The Concord Coalition said today that the Congressional Budget Resolution to be voted on in the House andSenate this week would help restore fiscal discipline by applying a deficit neutral "pay-as-you-go" (paygo)standard to all entitlement expansion and tax cut legislation and by creating a "trigger" in the House to protect

projected surpluses. Concord expressed concern, however, that the revenue numbers in the budget plan assumea waiver of paygo for certain tax cut extensions. This presumed waiver, along with the absence of cost cuttingentitlement reform and an assumed slowing of discretionary spending growth in the outyears, makes the goal of a $41 billion surplus in 2012 seem optimistic."Budget rules are only as strong as the political will to apply them. A close look at the pent-up spending and taxcut demands in the budget resolution's 23 reserve funds shows how important strict adherence to paygo will befor the desired surplus to result. In this budget, paygo acts as a fiscal levee against a flood of red ink. If thatlevee breaks, there is little chance of reducing the deficit, let alone of producing a surplus," said ConcordCoalition executive director Robert L. Bixby.

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1NC SHELL

C) INTERNAL LINK: SPENDING RESTRAINT NECESSARY TO PROTECT THE ECONOMY

MSNBC 05 (January 16, 2005, http://msnbc.msn.com/id/10868785/page/2/ )

Greenspan, who retires Jan. 31 after 18-plus years at the central bank, repeatedly has urged Congress and the Bushadministration to get the countrys financial house in order. Bloated budget deficits, if not curbed, could endanger the economy over the long term, Greenspan warned. Increased government borrowing would drive up interest ratesand weigh down economic activity. In the end, the consequences for the U.S. economy of doing nothing could besevere, he said recently. The looming retirement of 78 million baby boomers will put massive strains on thecountrys finances, Greenspan said. In 2008, the oldest of the boomers will reach 62, the earliest age at which theycan tap Social Security retirement benefits. Three years after that, in 2011, they will reach 65 and become eligiblefor Medicare. Ben Bernanke, chosen by President Bush to succeed Greenspan, also believes the situation istroubling and that the deficits need to be controlled. Budget deficits are a problem, he said. I think its importantto continue to reduce budget deficits. The administration has a goal of cutting the deficit in half by 2009 and plansto do that by restraining spending. In a worst-case scenario, foreigners who finance the U.S. budget and tradedeficits would sour on U.S. investments and unload their holdings. The prices of U.S. stocks and bonds could

plunge. Interest rates, including those for mortgages, could soar. A financial crisis could confront the country.

D) IMPACT: ECONOMIC COLLAPSE CAUSES NUCLEAR WAR

LEWIS 98 (Chris H. Lewis, environmental historian, University of Colorado-Boulder, THE COMING AGE OF SCARCITY, 1998, p.56.)

Most critics would argue, probably correctly, that instead of allowing underdeveloped countries to

withdraw from the global economy and undermine the economies of the developed world, the UnitedStates, Europe, Japan, and others will fight neocolonial wars to force these countries to remain within thiscollapsing global economy. These neocolonial wars will result in mass death, suffering, and even regionalnuclear wars. If First World countries choose military confrontation and political repression to maintainthe global economy, then we may see mass death and genocide on a global scale that will make the deathsof World War II pale in comparison. However, these neocolonial wars, fought to maintain the developednations' economic and political hegemony, will cause the final collapse of our global industrialcivilization. These wars will so damage the complex economic and trading networks and squander material, biological, and energy resources that they will undermine the global economy and its ability tosupport the earth's 6 to 8 billion people. This would be the worst-case scenario for the collapse of globalcivilization.

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UNIQUENESS: RESTRAINT NOW

CONGRESS PUTTING BRAKES ON SPENDING

Washington Times June 8, 2008 (How to Impose fiscal discipline Nancy Pelosi, speaker of the US House,Solutions, Two Views, M14, Lexis)

Over the past 18 months, the Democratic Congress has begun putting the brakes on six years of fiscalrecklessness. In 2009, we look forward to having a partner in the White House who shares our goal of restoring America's fiscal strength. Our nation's future depends on it.

DEMOCRATS REIGNING IN SPENDING NOW

Nancy Pelosi, Speaker of the House, June 8, 2008, (The Washington Times,http://speaker.house.gov/newsroom/articles?id=0145)

President Bush and the Republican Congress turned a $5.6 trillion, 10-year surplus inherited from the Clintonadministration into a $3 trillion deficit. Thanks largely to the cost of the war in Iraq and the Republican

penchant for tax cuts for the wealthy, the deficit ballooned to $248 billion in 2006. When Democrats promised anew direction for America in the 2006 campaign, we pledged to begin a new era of investing in American jobsand strengthening our national security - all while restoring the principle of fiscal responsibility. And we have.On Day One of the 110th Congress, we restored pay-as-you-go budget rules that helped balance the budget andspurred the record economic growth of 1990s.

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DEMOCRATS RETURNING TO FISCAL DISCIPLINE

Bond Buyer June 5, 2008 (Peter Schroeder, Legislation: Senate OKs $3.1 Trillion Budget, AMT Relief. Pg.5, vol. 364, LEXIS)

During yesterday's debate, Senate Democrats claimed that the budget represented a departure from the costlyfiscal policy of President Bush, marking a return to financial discipline and a stop to the growing deficit .

"This budget seeks to take the country in a different direction," Conrad said. "It will restore fiscalresponsibility by balancing the books by 2012 and continuing that balance in 2013."

FISCAL RESTRAINT NEEDED NOW

States News Service, June 4, 2008 (ENSIGN: THIS BUDGET NEEDS RESTRAINT, SPENDING DISCIPLINE LEXIS)

"Washington needs to wake up. We cannot pass one irresponsible budget after another and expect the nationaldebt to go away," said Ensign. "This no-limit credit card Congress is swiping belongs to the Americantaxpayers. We need to be honest with the American people who were promised a different Washington a" onethat is committed to fiscal discipline; spending restraint; and smaller, more efficient government ."

"We need to start making tough choices in Washington," said Ensign. "We need to make decisions that putour entitlements on a stable financial path and provide real tax relief to those who need it."

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FISCALLY RESPONSIBLE BUDGET NOW

US Fed News, June 5, 2008

Rep. Joe Courtney, D-Conn. (2nd CD), has issued the following news release: Congressman Joe Courtney andthe Democratic-led Congress have passed a fiscally responsible budget conference report today that beats back President George Bush 's proposed cuts to important programs, and creates a budget surplus by 2012. "I am

proud to support this budget conference report because it continues to restore fiscal discipline to Washingtonthat has been absent for nearly a decade without raising taxes," stated Courtney. "President Bush andCongressional Republicans squandered away the budget surplus in 2000 and sent our nation's finances spiralinginto the red. This sensible financial plan will balance the budget and build a surplus for the future by 2012without creating additional burdens on taxpayers."

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UNIQUENESS: DEFICIT INCREASING

DEFICITS WILL EXCEED 400 BILLION

Washinton Times 08 (Defining the Deficit April 25, A18, LEXIS)

Democrats pledge to finance their programs in part by eliminating the Bush tax cuts for families earningmore than $250,000 per year. Mr. McCain promises to veto all pork-barrel earmarks, and, far less credibly,to eliminate many corporate tax loopholes and waste in government. This isn't nearly enough. With budgetdeficits projected to exceed $400 billion in fiscal 2008 and 2009, the presidential candidates need to be far more forthcoming on the deficit levels they find acceptable and the date they would begin curtailing their

promises in order to reverse the disastrous fiscal situation the next president will inherit.

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2NC LINK: LOW PRIORITY PROGRAMS

LINK: SPENDING ON LOW PRIORITY PROGRAMS EXTENDS THE HUGE DEFICIT

BANDOW 96 (Doug Bandow, CATO, On the Corporaton for National Service and Community Service, ON THE CORPORATION FOR NATIONAL SERVICE AND COMMUNITY SERVICE, 1996, http://www.cato.org/testimony/ct-db052196.html)

Finally, money has to be an issue. The federal government continues to face the prospect of continuinghuge deficits. The only way to achieve fiscal responsibility is to eliminate lower-priority programs.Although Congress has so far limited the Corporation to less than a half billion dollars annually, the

political dynamic of concentrated beneficiary groups versus the larger taxpaying public has generally ledto expanded benefits over time. But even if the program stays relatively small, it will still be difficult to

justify spending for a program that, despite its laudable purpose, is generating such questionable benefits.

CUTTING LOW PRIORITY PROJECTS IS NECESSARY TO BALANCE SPENDING.

RIEDL 04 (Brian M. Riedl, Senior Policy Analyst in Federal Budgetary Affairs, The Heritage Foundation, HOW TO GET FEDERALSPENDING UNDER CONTROL, March 10, 2004, p. http://www.heritage.org/Research/Budget/bg1733.cfm?renderforprint=1)

Freeze discretionary spending in 2005. Discretionary spending leaped 39 percent between 2001 and 2004.Even after excluding defense and costs related to September 11, discretionary spending is rising 7 percentannually. Do these agencies need yet another spending increase this year? Congress and the Presidentshould do what millions of families do: set priorities and balance each high-priority spending increasewith a low-priority spending cut.

CUTTING LOW PRIORITY PROGRAMS IS NECESSARY TO OFFSET THE ECONOMIC EFFECTSOF OTHER PROJECTS.

UTT 05 (Ronald D. Utt, Ph. D. Herbert and Joyce Morgan Senior Research Fellow, Heritage Foundation, CONGRESS FACES PRESSURE TO SURRENDER PORK FOR FLOOD RELIEF, September 15, 2005, p.http://www.heritage.org/Research/Budget/wm841.cfm)

Shortly after Hurricane Katrina struck, it became apparent that the vast scope of devastation would require

a costly federal relief effort to supplement the hundreds of millions of dollars already raised voluntarilyfrom ordinary citizens. Heritage Foundation analysts suggested that some or all of the funding shouldcome from offsets in lower-priority federal spending programs that could be eliminated or postponed. In

particular, we recommended that the $25 billion of pork-barrel spending recently approved in the highwayreauthorization bill (H.R. 3) be redirected to reconstruct damaged infrastructure in the hard-hit Gulf Coastcommunities.

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LINK EXTENSIONS: LOW PRIORITY PROGRAMS

SPENDING ON LOW PRIORITY PROJECTS HURTS THE ECONOMY.

RUGY 05 (Veronique de Rugy, Research Fellow, American Enterprise Institute, HURRICANE RELIEF SPENDING,September 12, 2005, p. http://www.aei.org/publications/filter.all,pubID.23186/pub_detail.asp)

Like millions of Americans who have made personal sacrifices to help the survivors of Katrina'sdevastations, the President and Congress should make a sacrifice of their own. They must cut low priorityspending and wasteful programs to offset the new hurricane relief spending increase. Failing to do sowould impose excessive costs on the American economy. Being compassionate should not preventlawmakers from being responsible leaders.

CUTTING LOW PRIORITY PROGRAMS WILL GIVE CONGRESS CONTROL OVER THEBUDGET.

RUGY 05 (Veronique de Rugy, Research Fellow, American Enterprise Institute, NATIONAL REVIEW, December 1,2005, p. http://www.nationalreview.com/comment/de_rugy200512010820.asp)

Looking ahead, Republicans need to rediscover the reforming spirit that they brought to Washington after the landmark 1994 congressional elections. They should work to cut unneeded programs from both thedefense and nondefense parts of the budget. To begin getting the budget under control, an immediate hardfreeze should be imposed on overall discretionary spending. That should be followed by entitlementreforms, cuts in low-priority domestic programs.

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LINKS: OFF BUDGET SPENDING

OFF BUDGET SPENDING CAUSES INFLATION

UPI 04 (February 14, 2003, p. Nexis)

This decision is not exactly a profile in courage, especially for a president who, in his inaugural, humblyspoke of "confronting problems instead of passing them on to future generations." Since off-budgetspending is most often financed by revving up the dollar's printing press, it is likely that another cost of this war will be a general increase in the price level in years hence, furthering the downward slide of realincomes that has been occurring over the last three decades.

THE PLAN IS A PERMANENT ITEM THAT NEEDS TO BE FUNDED, SACRED COWS CRIPPLEALL EFFORTS TO REDUCE SPENDING

USA Today 02 ( February 6, 2002, p. Nexis)

To make his new wartime budget work, holding deficit spending to "only" $ 80 billion, President Bush iscounting on leading a huge herd of sacred cows to slaughter. If he pulls it off, he will claim a stunning

political triumph. If he can't, he will share with Congress the blame for a return to runaway red ink thatthreatens to destroy any hope of reducing the federal debt well into the next decade. Forcing sacred cowsto the slaughterhouse next fall may be the only way for Bush to show that his calls for spending restraintare more then budget window dressing.

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DEFICITS THREATEN THE ECON

DEFICITS SLOW LONG-TERM GROWTH

RIVLIN 04 (Alice Rivlin, is a senior fellow in the Economic Studies program at Brookings and is director of the Greater Washington Research Program, served as the founding director of the Congressional Budget Office, GROWINGDEFICITS AND WHY THEY MATTER, 2004,http://www.brookings.edu/es/research/projects/budget/fiscalsanity/chapter1.pdf )

Our colleague Charles Schultze once likened deficits not to the wolf at the door, but to termites in thewoodwork. By this he meant that deficits gradually weaken the ability of workers to produce goods andservices, thereby constraining wage increases and the growth of family incomes. Wage increases dependon how fast worker productivity grows. A major key to productivity growth, in turn, is investment inexpanded business facilities and know-howeverything from robotics on the factory floor to a computer on every desk. But when governments run deficits, they must compete with businesses for scarce financialcapital, driving up its cost or reducing its availability to the private sector.8 Just how much damagecurrently projected deficits will do depends on several assumptions, such as how much money we are ableto borrow from abroad. But a conservative estimate is that a $5.3 trillion accumulation of additional debtover the next ten years would reduce national income by $212 billion annually at the end of the period.This translates into about $1,800 less annual income for the average household than they otherwise wouldhave earned.

HIGH DEFICITS RAISE RATES AND SLOW GROWTH

MSNBC 05 (January 16, 2005, http://msnbc.msn.com/id/10868785/page/2/ )

Heres the worry: Persistent deficits will lead to higher borrowing costs for consumers and companies,slowing economic activity. As Uncle Sam seeks to borrow ever more to finance those deficits, rates onTreasury securities would rise to entice investors. That would push up other interest rates, such as homemortgages, many auto loans, some home equity lines of credit and some credit cards. Thats the

pocketbook risk to the American consumer, said Greg McBride, a senior financial analyst atBankrate.com, an online financial service. For businesses, rates on corporate bonds would climb. It would

become more expensive to borrow to pay for new plants and equipment and other capital investments.With a succession of budget deficits, you do expect to see higher interest rates. Where we fight about thisis over how big the effects are. But they are definitely there, said James Feyrer, assistant economics

professor at Dartmouth College.

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FISCAL DISPLINE KEY

EMPIRICALLY PROVEN --FISCAL DISCIPLINE KEY TO WORKER PRODUCTIVITY ANDINVESTMENT- DRAMATICALLY IMPROVING THE ECONOMY

Lemieux 01 (Jeff, the senior economist of the Progressive Policy Institute, Economic Stimulus and thePresident's Proposals for Unemployment Relief and Additional Tax Cuts , October 15, Progressive Policy Institute,http://www.ppionline.org/ppi_ci.cfm?knlgAreaID=127&subsecID=177&contentID=3844 )

The economic success of the mid- and late-1990s was built on a foundation of fiscal discipline. As thegovernment moved from large deficits to surpluses, hundreds of billions of dollars were freed up for privateinvestment. Much of that investment spurred the development of new technologies, which dramatically raisedworkers' productivity and incomes. As a result, real economic growth averaged about 4 percent a year, muchhigher than economists had previously considered achievable, and unemployment and poverty fell to the lowestlevels in decades. An investment bubble in the technology and telecommunications industries triggered thecurrent economic slump. The bubble seemed to peak in the months leading up to the feared Y2K changeover,and then deflated steadily throughout 2000, as the tech and telecom industries began to contract and theeconomy started to slow. This year, the Federal Reserve has dramatically reduced short-term interest rates, andCongress passed the Bush tax cuts. However, long-term interest rates, which have a powerful economic effect,have remained constant or fallen only very slowly, mostly because of investors' worries about the return tofederal deficits and debts. Likewise, the stimulative impact of the Bush tax cuts has been muted by consumers'concerns about personal as well as national debts. That is why any new spending programs or tax cuts enacted

by Congress should be strictly temporary, and should also have their costs fully offset in the long run. Beforethe onset of war, long-term investors were mostly concerned about how the government would finance theretirement of the huge baby boom generation. Now we must also face the cost of an extended military,diplomatic, and internal security program, which, combined with the tax cuts already in place over the next 10years, could easily force a return to deficit spending and accumulating debts.

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INTERNAL LINK EXTENSIONS

INTERNAL LINK- NEW SPENDING EXPLODES THE DEFICIT AND GUARANTEES ECONOMICDISASTER The Independent, November 4, 2004

The central question now is whether, freed from the all-consuming need to be re-elected, the President has it inhim to take the measures necessary to deal with the huge hole in the nation's finances which his policies havecreated. There is still time for the fiscal situation to be put right, but if things are left to drift and the deficitscontinue to grow, an economic disaster for the US and the rest of the world is all but inevitable. One way to

judge how bad the Bush economic record has been is to place it in the context of previous presidencies. Start with the public finances.The first chart shows public sector deficits and surpluses going back to the time of Jimmy Carter in the 1970s. This shows that,contrary to the conventional wisdom, Democratic presidents have persistently rebuilt public finances following periods of Republican

profligacy. Thus Carter took the budget from heavy deficit back to balance after the Nixon/Ford years; and Clinton turned the hugedeficit inherited from the elder Bush into a significant surplus. In this respect, the latest Bush has been true to Republican type, withthe public finances deteriorating by the equivalent of 6 per cent of GDP over one presidential term - a bigger deterioration than under his father, but about the same as under Ronald Reagan in the early 1980s. In other ways, however, the performance of the younger

Bush has been more alarming. Reagan cut taxes heavily in 1981 to encourage economic growth, but as he came to appreciate the budgetary consequences - as early as 1982 in his Tax Equity and Fiscal Responsibility Act - he started to reverse the cuts and put the budget back on an improving trend. And to give George Bush senior his due, even following the "read my lips, no new taxes"campaign in 1988, he pushed through tax increases to stop the deficit running out of control. This Bush, however, has relentlessly cuttaxes and increased spending throughout his administration with the single purpose of delivering a short-term stimulus to the economyand ensuring re-election. He has never considered corrective action of any kind. He has been entirely heedless of the longer termconsequences of policies which have led to massively indebted households and the biggest current account deficit in the history of theworld. Conventional economic opinion has not yet woken up to what all this means for the US economy during a second Bush term."Consensus forecasts", which incorporate the views of the leading economic groups, suggest that the US will continue to grow well -in excess of its 3per cent plus trend rate - over the medium term. Seen in the perspective presented here, however, this looks extremelyunlikely. The impact of tax cuts aimed at the election has largely expired and rising oil prices are in effect imposing a new tax onhouseholds. Interest rates are rising instead of falling. Debt payments as a proportion of household incomes have reached an all-timehigh. The private sector can therefore be expected to resume the process of putting its finances in order, which Bush interrupted, and

this means the American consumer will no longer be in a position to drive the economy forward. Slower consumer demand will meanslower growth. If Bush would change tack and adopt the first approach, the ultimate crisis could still be avoided and the famous"imbalances" adjusted reasonably smoothly. In this case, with the government helping to moderate demand, the Federal Reservewould need to raise interest rates only moderately, and hence could avoid the sort of shock to heavily indebted consumers which reallywould precipitate a recession. At the same time, the current account deficit could be stabilised and put on an improving trend, whichwould strengthen confidence in the dollar, halt the currency's decline and avoid the "dollar collapse" scenario which would beassociated with rising bond yields and further cuts in consumer and business borrowing. But if no corrective action is taken we canrely on none of this. An acceleration in the dollar's decline, sharply rising interest rates and bond yields, anabrupt response by consumers, a rise in protectionism in response to a combination of current accountdeficits and job losses - all these will then be very much on the cards. And all this against the background of massive budget deficits which, at the end of the day, would still have to be corrected , completing a crisisscenario . Bush is therefore facing a crucial test. Does he understand the necessity of repairing America's

finances, and does he have the political courage to tackle the problem? There has not been a single sign that theanswer to either of these questions is yes, although he does have the opportunity to change tack now that he nolonger faces re-election. We simply do not know.

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NO NEW SPENDING INTERNAL LINK EXT

VETOING NEW SPENDING BILLS IS KEY TO FISCAL DISCIPLINE AND ECONOMIC GROWTH.

Andres 07 ( June 7, 2007 http://washingtontimes.com/op-ed/20070606-090318-1395r.htm)

For the good of the economy and his party, President Bush should systematically veto this symphony of spending.

Back by popular demand (at least based on the results of last November's elections) are the sopranos of spending congressional Democrats, who already demanded an additional $17 billion in expenditures in therecently passed funding measure for the Iraq war. They now want over $23 billion more than Mr. Bushrequested to grow an even larger federal-government big band for next year.

But when it comes to spending, Mr. Bush has an opportunity to rally his party and remake Republicans' badlydamaged image on fiscal restraint. And the Democrats seem willing to give him that opportunity.

The White House is on solid ground when it comes to the economic benefits of fiscal restraint. While it ishard to hear any positive sounds through the cacophony of bad news about Iraq, the U.S. economy continues to

produce sweet harmony. Steady growth, job creation, low inflation and a booming stock market are theconsequences of six years of Republican fiscal policies. All of these things are threatened by the tax increasesand excessive spending included in the budget recently adopted by the new Democratic majority.

As Congress begins crafting the twelve annual appropriations measures, the $20 billion in extra spendingDemocrats approved in their budget will get distributed throughout these bills. Based on current estimates, thismeans most of the appropriations measures will call for more spending than proposed by President Bush,

producing plenty of spending largess to warrant vetoes.To his credit, Office of Management and Budget Director Rob Portman sees the oversized spending sedan

coming down the pike. "The Administration does not believe that the first step on the path to a balanced budgetshould be a substantial increase in Federal spending," Mr. Portman wrote to congressional budget leaders lastmonth. "Yet that is precisely what is called for in the budget resolutions adopted by the House and the Senate."He warned Congress to keep spending in line with the White House request, or run the risk of the veto pen. "Itis timely to notify you that I will recommend the President veto any appropriations bill that exceeds his requestuntil Congress demonstrates a sustainable path that keeps discretionary spending within the President's top lineof $933 billion," Mr. Portman wrote.

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INTERNAL LINK: SPENDING HURTS ECON

GOVERNMENT SPENDING CRIPPLES ECONOMY

RIEDL 06 (Brian M Riedl, Grover M. Hermann Fellow in Federal Budgetary Affairs in the Thomas A. RoeInstitute for Economic Policy Studies at The Heritage Foundation. June 19, 2006,http://www.heritage.org/research/budget/wm1132.cfm)

The Stop Over-Spending (S.O.S.) Act, authored by Senate Budget Committee Chairman Judd Gregg (R-NH)and cosponsored by over a dozen senators, provides a strong blueprint for building a budget process that reflectsAmericas budget priorities. The S.O.S. Act would create discretionary caps and temper exploding entitlementcosts. It would create commissions to wrestle with unsustainable entitlement growth and government waste. TheS.O.S. Act includes President Bushs line-item veto proposal, a switch to biennial budgeting, and severalenforcement and rules improvements that would help Congress get a better handle on federal spending. This

package of budget process reforms would help lawmakers pare back spending trends that would otherwise,

within a decade, require tax increases of nearly $7,000 per household just to balance the budget. Serious budget process reform is necessary. Federal spending has leaped 45 percent since 2001 to a peacetime record of $23,760 per household. [1] Even worse, the impending retirement of 77 million baby boomers threatens to pushSocial Security, Medicare, and Medicaid spending to levels that would require European-size tax increases or the elimination of all other government programs .[2] Yet it is nearly impossible for well-intentioned lawmakersto rein in runaway spending while still clinging to an outdated budget process that was created in 1974 tomaximize spending and then subjected to more than 30 years of loopholes and abuse. The easiest course for lawmakers would be to ignore current trends in federal spending, duck budget process reform, and continuewith business as usual. This is exactly the shortsighted, irresponsible approach that created todays federalspending problem, and continuing it would guarantee a future of European-level government spending,crippling tax rates, and deteriorating economic performance. To avoid this, lawmakers must take responsibility

for federal spending and make difficult but necessary decisions. The Stop Over-Spending Act is a strong blueprint for lawmakers ready to confront the greatest economic challenge of our era.

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http://www.heritage.org/research/budget/wm1132.cfm#_ftn1http://www.heritage.org/research/budget/wm1132.cfm#_ftn2http://www.heritage.org/research/budget/wm1132.cfm#_ftn2http://www.heritage.org/research/budget/wm1132.cfm#_ftn1http://www.heritage.org/research/budget/wm1132.cfm#_ftn2


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INTERNAL LINK: SPENDING HURTS THE ECONOMY

SPENDING TOO MUCH MONEY HURTS THE ECONOMY

Garfield 95 (Reed, senior economist, March 27, 1995, Government Spending and Economic Growth)

Workers offer their labor when they perceive that the benefits of work are better than the benefits of leisure.Policy makers must remember that businesses expand when they expect future profits and reductions inworkers' take-home pay slows the growth in the total number of hours worked. Through excessive spending,the government negatively affects the long-run growth in the output of goods by reducing business profitsand workers' take-home pay. As Table 1 and Table 2 show, the government is increasing its take of resourcesfrom the private sector. This increase in expenditures is slowing the growth of the economy. Unless we stopthe future expansion of government spending the problem will exacerbate. To ensure well-functioningmarkets, government must expend resources to enforce contracts, provide national security, and protect against

criminals. Increased government expenditures , above this minimal level , have a diminishing effect on thegrowth of the economy . At some level of spending, the impact of government expenditures on theproduction of goods and services is negative. Excessive government spending makes everybody poorer .However, it is important where the government spends tax dollars. Public investment on roads, ports, and

bridges compliments private investment to improve economic productivity, though economic growth sufferswhen government diverts funds that could be more profitably used to hire workers or buy new machines.

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US KEY TO GLOBAL ECON

THE GLOBAL ECONOMY DEPENDS ON ACTIVITY IN THE US

Beck 07 (RACHEL ,Associated Press business columnist Rachel Beck, Growing global economy relies heavily onU.S. shoppers, April 19, 2007, http://www.dailyreportonline.com/Editorial/News/new_singleEdit.asp?individual_SQL=4%2F19%2F2007%4014732_Public

_.htm]

THE WORLD SHOULD thank American shoppers . Theyve kept buying, despite all the reasons they have for pinching pennies. Their spending has moderated the slide in the U.S. economy largely caused by the housingmarket collapse. U.S. consumers also have fueled growth abroad, where many economies are expanding at amuch faster pace than what has been seen here. Whether that continues is shaping up as one of the keyquestions of the day. Morgan Stanleys chief global economist Stephen Roach says it best: If the lead engine of the global growth train goes off the tracks, the rest of the world will be quick to follow. That throws cold water

on the idea that the global economy is decoupling, a theory advanced by some economists who claim that just because U.S. growth is slowing, economies elsewhere can still thrive. With so much reliance on U.S. shoppersto keep global growth afloat, recent news that some retailers expect tougher times ahead should be noted. Wal-Mart Stores Inc. was among those sounding warnings. The worlds largest retailer said it expects Aprils sellingenvironment to be tough. Federated Department Stores Inc., owner of the Macys chain, said its first-quarter sales will come in at the low end of expectations, while Childrens Place Retail Stores Inc. said its first-quarter earnings per share will be roughly flat with last years results, causing it to likely miss Wall Street estimates.Countries counting on U.S. shoppers to buy everything from toys to T-shirts have the most at stake. Mexico topsthat list, with goods shipped to the United States accounting for 23 percent of its gross domestic product, triplethe levels seen from 1981 to 1985, according to the IMF. Chinas U.S. exports were 5.9 percent of its GDP from2001 to 2005, well above the 0.8 percent two decades ago. Other Latin American and emerging Asian

economies also have seen their exports to the United States go up. American shoppers have done right by theglobal economy for a long time. The world better hope they continue to feel optimistic.

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2NC INFLATION MPX MODULE

GOVERNMENT SPENDING TRIGGERS INFLATION GOVERNMENT WILL HAVE TO PRINTMORE MONEY.

Baum 01 (Bloomberg News, 7-16, http://www.taipeitimes.com/News/bizfocus/archives/2001/07/18/94695)

An anecdote from Martin's book is instructive. It answered a question that has long plagued me aboutGreenspan's thinking. In Martin's retelling, Burns used to ask his graduate students, ``What causes inflation?''Burns would pause, pan the room, before answering his own question: ``Excess government spending causesinflation.'' That paragraph on page 29 was an epiphany for me. All these years of watching and listening to AlanGreenspan, I've never understood how the one-time member of Ayn Rand's collective could prefer debtreduction to tax cuts (at least until it was politically prudent for him to support them when George W. Bush

became president).While the idea that government spending was inflationary was popular at the time -- the federal government

borrows to finance its spending, and the central bank then monetizes it by buying the debt -- the thinking ismore sophisticated today. While spending by the government is less efficient than that of the private sector sinceit isn't sensitive to price signals, it doesn't matter who borrows and spends. The central bank always has theability to offset it.An increase in government spending, all things equal, would cause interest rates to rise. Nothing says the central

bank has to accommodate the increased demand for credit, supplying sufficient reserves to prevent the short-term rate from rising.

INFLATION CAUSES CREDIT LIQUIDATION CYCLES THIS RESULTS IN GLOBAL WAR ANDEXTINCTION.

Bailey, 90 (Senior Director of International Economic Affairs, THE WORLD AND I, p. 33)

Central bankers have an ingrown horror of inflation and tend to overdo anti-inflationary measures and underdoantideflationary ones. They sometimes even compound the problem by taking anti-inflationary steps during adeflationary period, as the Federal Reserve did at the onset of the Great Depression."The thirties after all began three months after the inception of the Great Depression and ended four monthsafter the start of World War II. This is not a coincidence. Tens of millions were killed and maimed in the SecondWorld War. If another historical credit liquidation cycle is allowed to take place in the usual chaotic fashion thechances of another global armed conflict will be greatly increased--time not only would hundreds of millions

(rather than tens of millions) be killed or wounded but the very hopes and the future of man kind, as such, might well be destroyed in the process.

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IMPACT EXTENSIONS

ECONOMIC COLLAPSE LEADS TO EXTINCTION.

Bearden 00 (Tom, Retired LTC, US Army, CEO of CTEC Inc., Director of the Association of Distinguished AmericanScientists, June 12, The Unnecessary Energy Crisis: How to Solve it Quickly,http://www.cheniere.org/techpapers/Unnecessary%20 Energy%20Crisis.doc )

History bears out that desperate nations take desperate actions. Prior to the final economic collapse, the stresson 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. Asan example, suppose a starving North Korea launches nuclear weapons upon Japan and South Korea, includingU.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 nukesare 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 pre-emptive 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 WMDarsenals that will be unleashed, are already on site within the United States itself. The resulting greatArmageddon will destroy civilization as we know it, and perhaps most of the biosphere, at least for manydecades.

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http://www.cheniere.org/techpapers/Unnecessary%20%20Energy%20Crisis.dochttp://www.cheniere.org/techpapers/Unnecessary%20%20Energy%20Crisis.doc


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IMPACT EXTENSIONS

ECONOMIC DECLINE CAUSES GLOBAL NUCLEAR WAR MEAD 92 (Walter Russel, fellow, Council on Foreign Relations, New perspectives quarterly, summer pp. 28)

What if the global economy stagnates - or even shrinks? In that case, we will face a new period of international conflict:South against North, rich against poor. Russia, China, India - these countries with their billions of people and their nuclear weapons will pose a much greater danger to world order than Germany and Japan did in the '30s .

ECONOMIC COLLAPSE FROM CREDIT LIQUIDATION TRIGGERS NUCLEAR CONFLICT ANDEXTINCTION.

Bailey, 90 (Senior Director of International Economic Affairs, THE WORLD AND I, p. 33)

"The thirties after all began three months after the inception of the Great Depression and ended four monthsafter the start of World War II. This is not a coincidence. Tens of millions were killed and maimed in the SecondWorld War. If another historical credit liquidation cycle is allowed to take place in the usual chaotic fashion thechances of another global armed conflict will be greatly increased--time not only would hundreds of millions(rather than tens of millions) be killed or wounded but the very hopes and the future of man kind, as such, might well be destroyed in the process.

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IMPACT: DA TURNS CASE

DOWNTURN AGGRAVATES ENVIRONMENTAL PROBLEMS, DISEASE EPIDEMICS, ANDETHNIC CONFLICTS TURNS YOUR CASE.

Silk, 96 (Chair of Business Week Board, Making Capitalism Work, pp. 27-8)

Like the Great Depression, the economic slump of the early 1990s fanned the fires of nationalist, ethnic andreligious hatred around the world. Economic hardship was not the only cause of these social and political

pathologies, but it aggravated all of them, and in turn they fed back upon economic development. They alsoundermined efforts to deal with such global problems as environmental pollution, the production and traffickingof drugs, crime, sickness, famine, AIDS, and other plagues.

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A/T: PAST SPENDING EMPIRICALLY DENIES DISAD

SPENDING IN THE LAST SIX YEARS HAS CORRESPONDED WITH GDP AND WAS A DROP INTHE BUCKET.

IBD, 6-18-7That said, does the spending of the past six years really constitute unusual "big government?" We would argue,no. Using the most meaningful measure of the size of government -- spending as a share of GDP -- we see thatin fact we're today right where we were in 1996 -- about 20.3% of GDP. And it's declining . This year, spendingas a share of the economy is expected to fall to 19.9% of GDP.If you look at the chart, you'll note that's actually below the average of 20.7% of GDP since 1970. Spending

boom? Hardly.

DEFICITS MAY HAVE BEEN HIGH IN THE PAST BUT THEY ARE ACCOUNTED FOR CONTINUED HIGH DEFICITS FROM THE PLAN UNIQUELY COLLAPSE THE ECONOMY.

Gale, 04 (et. al, Economic Studies Program Deputy Director -- Brookings, Brookings Report, issue 2,Proquest)Both the traditional models and the analysis of nontraditional effects focus on gradual negative effects fromreduced national saving. This focus may be too limited, however, in that it ignores the possibility of much moresudden and severe adverse consequences.32 In particular, the traditional analysis of budget deficits in largeadvanced economies does not seriously entertain the possibility of explicit default, or of implicit default throughhigh inflation.33 If market expectations regarding the avoidance of default were to change and investors haddifficulty seeing how the policy process could avoid extreme measures, the consequences could be much more

sudden and severe than traditional estimates suggest. The role of financial market expectations in this type of scenario is central. One of the principal ways in which such a "hard landing" could be triggered is if investors begin to doubt whether a country will maintain its strong historical commitment to avoiding high inflation inorder to reduce the real value of the public debt. As Laurence Ball and Mankiw note,We can only guess what level of debt will trigger a shift in investor confidence, and about the nature andseverity of the effects. Despite the vagueness of fears about hard landings, these fears may be the mostimportant reason for seeking to reduce budget deficits ... as countries increase their debt, they wander intounfamiliar territory in which hard landings may lurk. If policymakers are prudent, they will not take the chanceof learning what hard landings in G-7 countries are really like.34Although we do not explicitly incorporate nontraditional effects in our analysis below, they serve as animportant reminder of why budget deficits, especially chronic deficits, could exert large adverse effects on

U.S. economic performance. Our focus on traditional effects is certainly justifiable in the context of ahistorical analysis of postwar data from the United States. That does not imply, however, that ignoring suchissues is appropriate when examining the likely impacts of future deficits. The nation has never before faced the

prospect of deficits that are large, sustained, and indeed likely to grow over many decades.

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A/T: SPENDING GOOD TURN

PUMP-PRIMING FAILS IN AN OPEN ECONOMY CONSUMERS AND BUSINESSES WILL BUYIMPORTS UNDERCUTTING ITS EFFECTIVENESS AND CAUSING STAGLATION.

MANDEL & DUNHAM, 06 (BUSINESS WEEK, NOV. 20, LEXIS)

Today, Keynes's prescriptions could be called Policy Classic, since even diehard free marketeers agree thatfighting recessions is the right thing for governments to do. What's more, Policy Classic still works in themodern global economy, up to a point. When a fire starts in your house, you should still try as hard as you canto douse it with water, even if your hose is leaky.Consider how Washington responded to the recession of 2001. One could quibble with the exact timing of Greenspan's rate cuts, and the Democrats weren't particularly happy with the Bush tax cuts. But there's nodisputing that massive amounts of fiscal and monetary stimulus made the 2001 downturn one of the mildest onrecord. And the recovery hasn't been half bad, either. Since the economy peaked in the second quarter of 2001,economic growth has averaged a decent 2.8%.Yet the recovery could have been a lot stronger, given the amount of stimulus pumped into the economy.Consumers and businesses aren't fools: They used their extra money to buy cheap imports rather than moreexpensive American-made goods and services. Between 2001 and today, imports rose by three percentage

points as a share of GDP, one of the main reasons that job growth was so slow. By comparison, the import sharerose by only one percentage point or so in the recoveries of the early 1980s and the early 1990s.In an open economy, Policy Classic loses its punch. The inability to create jobs after a recession is bad enough.What really should concern us all, though, is what might happen in the next recession. Foreign investors have

been extraordinarily willing to put their money into the U.S. But let's suppose, just for the sake of argument,that a recession here makes other countries look like a better bet. Then foreign investors pull out their money,

pushing interest rates way up and the dollar way down. The higher rates slow the economy, and the lower dollar makes imports more expensive, triggering higher inflation.Poof! Instant stagflation. And what's worse, Bernanke and the Fed will be forced to keep interest rates high tofight inflation.

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HIGH DEFICITS MAKE PUMP-PRIMING IMPOSSIBLE.

Weisberg 06 (Financial Times, 2-9, Lexis)

The Bush binge could end with a bang or a whimper. If confidence in the US economy is eroded, foreignersmay stop financing our deficits. The Treasury would have to offer higher returns to sell its bonds, raising long-term rates. The withdrawal of foreign capital would also prompt a decline in the value of the dollar, as traderssold dollar-denominated instruments. Such trends can create a vicious cycle, in which misery is never at a lossfor company. In a worst-case scenario, unchecked deficits could provoke a Mexican or Asian-type financialcrisis. The Fed might be able to forestall a meltdown - or it might not. As Lawrence Summers, former USTreasury secretary, once put it, the thing about a dysfunctional relationship with the rest of the world is that itcan go on much longer than you expect but it can also end much more suddenly than you expect.Another hazard is losing what Robert Rubin, Mr Summers' predecessor as Treasury secretary and my guru onthis subject, calls "resilience". A deficit of 3.2 per cent of GDP, which is what George W. Bush predicts for this

year, curtails the ability of policymakers to respond effectively to the unforeseen and unforeseeable. The USeconomy absorbed the shock of the September 11 2001 attacks without falling into recession in part because of Washington's use of fiscal as well as monetary policy in response. But when the budget is already deeply in thered, the "break glass in case of fire" box comes pre-smashed. In the event of another major terrorist attack or natural disaster, Keynesian tools such as tax cuts and stimulus spending will be much harder to deploy than in2001, when the budget was still in surplus.Perhaps the gravest harm deficits do is to undermine the government's ability to take on the country's non-emergency problems - the healthcare mess, the education mess, the baby boom generation's under-fundedretirement and so forth. Even into the 1990s, many Democrats tacitly approved of deficit spending, because itenabled them to do more without higher taxes. In those days, Republicans tended to oppose deficits becausethey wanted government to do less. But during the Bush presidency, these roles have been reversed.

Republicans now see deficits as a way to disable the federal government by "starving the beast". Democrats, bycontrast, have come to loathe deficits, because they prevent government from doing anything .

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OTHER COUNTRIES PROVE PUMP-PRIMING FAILS.

Wolf 01( Financial Times, Foreign Policy, pg. 48)

Optimistic observers counter that U.S. economic policymakers would not sit idly by as their country slippedinto recession. On the fiscal side, the formula appears simple: Keynesian pump priming. With starry-eyed U.S.government forecasters predicting budget surpluses as far as their models can compute, it might seemreasonable to reinvigorate a struggling economy by increasing public spending or lowering taxes. In theory, thislogic is persuasive. But Japanese and British experiences show that once consumers and corporations develop a

pessimistic outlook as a result of a reduction in their perceived wealth, the public sector may be forced into deepdeficits yet still be unable to prevent a recession or prolonged stagnation. In the United Kingdom, for instance, the government s fiscal balance collapsed from a surplus of just under 1

percent of GDP in 1989 to a deficit of nearly 8 percent of GDP four years later. Even so , the economy still

contracted sharply . Similarly, Japan's general government balance moved from a surplus of just under 3 percent of GDP in 1991 to a deficit of more than 7 percent last year. Yet, Japan has suffered a decade of stagnation, as well as a recession in 1998. Finally, Sweden's case is particularly sobering. The country's fiscal

balance moved from a surplus of 5 percent of GDP in 1989 to a deficit of 13 percent of GDP four years later--anastounding swing of 18 percentage points. Yet the economy shrank from 1991 to 1993.Pumping government money into the economy would not be, then, the simple solution. Moreover, it is implausible that U.S. fiscal policy would be deployed aggressively enough to offset a major private sector retrenchment. The decline in tax revenues and increase in government spending that automatically followrecessions would cushion the blow somewhat, though at the dear political price of a return to large fiscaldeficits. Even so, this would not prevent a serious economic slowdown.

CURRENT DEFICITS MEAN NEW SPENDING WILL HURT THE ECONOMY PAST EXAMPLESDONT PROVE YOUR TURN.

Elliott, 04 (The Guardian, June 14, Lexis)It's tempting to say that Ronnie was the last of a breed that included our own dear Ted Heath, but that would be incorrect. George Bush Jr is a fully

paid up disciple of Reaganomics, and the cost of the war on terror together with the tax handouts to the better off have had the predictable outcome of turning an inherited budget surplus into a $ 500bn deficit within four years. All this turns received political wisdom on its head. Traditionally, theRepublicans were the party of sound money, the Democrats the deficit spenders. In the recent past, however, it has been Reagan and the currentoccupant of the White House who have been the spendthrifts, Bill Clinton - under the tutelage of Fed chairman Alan Greenspan - the deficit hawk.

The American experience is a useful antidote to the view that fiscal policy no longer matters. In both the Reagan and Bush Jr years , deficit

spending has dovetailed with easier monetary policy to support growth. There is nothing wrong with runningdeficits when activity is weak, provided that policy-makers are prepared to accept the inevitable corollary: thatsurpluses should be run in good times. This part of Keynes's thinking is harder to swallow and Jacques Chirac

pointedly noted at last week's G8 summit that the size of the US trade and budget deficits posed a potentialthreat to the stability of the global economy.

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AFF: NON-UNIQUE NO RESTRAINT NOW

CURRENT BUDGET SHOWS NO RESTRAINT

States News Service, June 4, 2008 (ENSIGN: THIS BUDGET NEEDS RESTRAINT, SPENDING DISCIPLINE LEXIS)

Senator John Ensign voted against a tax-and-spend budget today that saddles taxpayers with the largesttax increase in American history and fails to demonstrate fiscal discipline.

"Today' vote was another disappointment for the taxpayers because this budget doesnat show even a hintof restraint or spending discipline," said Ensign. "Under this plan, taxes skyrocket, government grows, thenational debt swells and entitlement spending remains a looming crisis."

Under this budget, which passed the Senate today 48 a" 45 without a majority of Senators, Nevadans onaverage will face a nearly $3,000 tax increase. Small businesses will pay more than $4,000 in additionaltaxes. To go along with these tax hikes, the Democratsa budget increases spending by more than $200

billion.

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AFF: NON-UNIQUE SPENDING NOW

CONGRESS SPENDING NOW AND MORE BUDGET-BUSTING PROSPECTS ARE COMING

Christian Science Monitor June 30, 2008 (Gail Russell, Congress's spending goes unchecked, with morelikely, WEB, pg. 25, LEXIS)

Before leaving town last week, Congress wrapped up a $162 billion war-funding bill and expanded America'sentitlement system by giving veterans the biggest boost in college benefits since the World War II GI bill.Lawmakers also added a 13-week extension to unemployment benefits and approved $2.7 billion inemergency relief for the storm-lashed Midwest. Despite commitments to fiscal discipline on both sides of theaisle, none of it is paid for - at least not by today's taxpayers. "There is absolutely no appetite to make hardchoices," says Robert Bixby, executive director of the Concord Coalition, citing the war-funding bill. "There'snever been any attempt to pay for the war, and now that's being used to expand a major entitlement programfor veterans, which might be a good idea, but we ought to pay for it." Since the 9/11 terrorist attacks,Congress has voted some $857 billion in war funding, according to the Congressional Research Service. Thatincludes $656 billion for Iraq, $173 billion for Afghanistan, and $29 billion for enhanced security - all of itso-called emergency spending paid for with borrowed money. The new GI Bill of Rights, estimated to cost$62 billion over 10 years, is a permanent entitlement that pays four years of college tuition for veterans whohave served since the 9/11 attacks. At the urging of President Bush, this new benefit will also be transferableto spouses or children to help prevent a mass exodus from the military after the new benefit comes on line. Inthe House, conservative Democrats won support for offsets for the new entitlement with a new tax onAmericans making more than $500,000 a year, but that provision fell out of the final version of the bill after GOP protests in the Senate."We were very glad that the House passed a bill that did pay for it and weredisappointed that the final bill did not. But in the scheme of things, we're talking about something that costs$0.6 billion a year against a war that's costing $150 billion to $170 billion a year - and we're not paying for that," says Richard Kogan, a senior fellow at the Center on Budget and Policy Priorities in Washington. Theremaining weeks of the 110th Congress hold more budget-busting prospects, including a second emergency-spending bill for domestic priorities.

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AFF: NO INTERNAL DEFICITS NOT KEY

NO INTERNAL LINK THE GOVERNMENT WILL ADAPT TO DEFICITS

Altig, 05 (Vice president and associate director of research, Federal Reserve Bank of Cleveland, adjunct professor of economics in the Graduate School of Business at the University of Chicago, March 29, Wall Street Journal, DoesOverseas Appetite for Bonds Put the U.S. Economy at Risk? http://online.wsj.com/public/resources/documents/econoblog03292005.htm)

An unwillingness of the world to absorb more dollar-denominated assets at the margin strikes me as part of therecipe for a plain-vanilla adjustment process. Americans try to consume more than their means, but the rest of the world isn't interested in supplying the goodies. The dollar depreciates to address the imbalance between thesupply and demand for the currency, the current-account effects reverse, interest rates rise to choke off theexcess demand for U.S. produced goods and services, maybe there is some upward pressure on the price level.Happens all the time. The hard-landing story, it seems to me, rests on the development of some significantcapital account shock, by which I mean a substantial attempt to quickly unwind existing dollar portfolios. Ithink that is what you must mean when you say foreign central banks will "start pulling the plug as their capitallosses, financial imbalances, bubbles and inflation pressures become massive and mounting, if not before." Inother words, the disaster does require pulling the plug, not just turning off the water spigot. Certainly, mycomments should not be construed to mean that I believe a soft-landing process is always without bumps. I'mmore of an optimist on the fiscal policy outlook than you. I can remember the 1980s version of the twin deficitstory. Those deficit-GDP ratios you fear for 2009 and 2015 weren't just a concern then. They were a reality. Butthings changed, policy adjusted. I have faith that the same will happen again.

NO IMPACT TO FISCAL DISCIPLINEITS EASY TO CONTROL AND THE IMPACTS ARENTWELL PROVEN.

Moore, 03 (Stephen, Fellow at the Cato Institute, 9/12, Washingtons Biggest Deficit Is the Shortfall of Courage, http://www.cato.org/dailys/09-12-03.html)

A fascinating new study was just released by the House Republican Study Committee under the able leadershipof Rep. Sue Myrick of North Carolina. The RSC shows that if Congress had simply lived under the spendinglimits set forth in the 1997 budget deal agreed to by Clinton and the Republicans in Congress, the budget would

be balanced today -- even with Bush's tax cuts.Meanwhile, my own budget analysis shows that every Congress since 1994 has accelerated expenditures at afaster pace. Conclusion: It's the spending, stupid! (See chart.)There's a spirited debate in Washington about how the budget deficit impacts our economy. Some say deficitscause inflation and higher interest rates. Maybe so, but there's little evidence of that effect.Some say interest payments on debt crowd out other spending -- which may be true, but if it is that's a goodthing, because it constrains the congressional spending appetite.

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AFF: NO INTERNAL EMPERICALLY DENIED

PAST SPENDING AND EARMARKING DENIES YOUR DISAD.

Ornstein 07 (AEI, Roll Call, June 20, lexis)

Let me start with the earmarks. The exemplary definition of chutzpah is the child who murders his parents andthen pleads with the court for mercy on the grounds that he is an orphan. Maybe that definition can besupplanted.It has been an absolute hoot to watch the GOP leaders - who on their watch took a minor-league earmark systemand deliberately orchestrated its explosion, gleefully presided over the massive expansion of governmentspending, and gave us examples such as former Speaker Dennis Hastert (Ill.) and California Reps. Gary Miller and Ken Calvert using the earmark route to make or supplement their personal fortunes - suddenly becomeardent reformers. It has been an equal hoot to watch President Bush, who never raised a single peep whenearmarks exploded and never vetoed an appropriations bill during his first six years, suddenly becoming aborn-again fiscal watchdog.

PAST SPENDING RECORD DEFICITS DISPROVE THE IMPACT.

Montgomery07 (Wash Post Staff, June 12, http://www.washingtonpost.com/wp-dyn/content/article/2007/06/11/AR2007061102059.html)But lawmakers' appetite for spending restraint collapsed during the surpluses of the late 1990s. After PresidentBush took office, Republican enthusiasm for big tax cuts combined with a demand for increased spendingrelated to the 2001 terrorist attacks -- as well as a new Medicare prescription drug benefit -- to replace thesurpluses with record deficits.

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AFF: NO INTERNAL US ECON NOT KEY TO WORLD ECON

US IS NOT KEY TO THE GLOBAL ECONOMY

International Economy, 07 (1-1, Vol. 21, No. 1, Lexis)Recently, The Economist magazine editorialized that any further U.S. economic slowdown in 2007 is unlikelyto impede the growth of the rest of the world. In a world where America has been the consumer of last resort,"buoyant Asian demand should help keep Europe afloat despite a U.S. slowdown ," the editorialists opined.European Central Bank President Jean Claude Trichet recently offered a similar assessment: "A 1.0 percentslowing in the United States" would subtract only "0.2 percent from growth in the Euro area, taking intoaccount the echoeffect from the rest of the world."

US ECONOMIC DECLINE WONT DEVASTATE THE GLOBAL ECONOMY.

Smith, 07 (Jan 22, http://www.theaustralian.news.com.au/story/0,20867,21095128-643,00.html)Even if the US economy does slow - financial markets are still not certain that Ben Bernanke, the chairman of the Federal Reserve Board, will not raise interest rates again - the big shift in the global economy is that it is no longer reliant on the US as a growth locomotive.The rise of China and India, coupled with the upturn in Europe and continued growth in Japan, has changed thelandscape. According to the Economist Intelligence Unit, the shift will continue towards China and India and

"Asian airport lounges will bulge" as executives seek new opportunities."The dynamism of emerging markets largely explains the spring in the executive step," the EconomistIntelligence Unit says."For the second year running, rising demand in the developing world is seen as the most critical force at play inthe global marketplace. A clear majority of respondents to our survey intend to invest more time and money inemerging markets over the next three years than in developed markets."

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AFF: NO MPX ECON COLLAPSE NOT CAUSE WAR

ECONOMIC DOWNTURNS DONT CAUSE WARS.

Miller 00 (Faculty of Administration, University of Ottawa, Interdisciplinary Science Reviews, Vol. 25, No. 4, pg. 277)

The question may be formulated. Do wars spring from popular reaction to a sudden economic crisis thatexacerbates poverty and growing disparities in wealth and incomes? Perhaps one could argue, as some scholarsdo, that it is some dramatic event or sequence of such events leading to the exacerbation of poverty that, in turn,leads to this deplorable denouement. This exogenous factor might act as a catalyst for a violent reaction on the

part of the people or on the part of the political leadership who would then possibly be tempted to seek adiversion by finding or, if need be, fabricating an enemy and setting in train the process leading to war.According to a study undertaken by Minxin Pei and Ariel Adesnik of the Carnegie Endowment for InternationalPeace, there would not appear to be any merit in this hypothesis. After studying ninety-three episodes of

economic crisis in twenty-two countries in Latin America and Asia in the years since the Second World War they concluded that:Much of the conventional wisdom about the political impact of economic crises may be wrong The severityof economic crisis- as measured in terms of inflation and negative growth bore no relationship to thecollapse of regimes (or, in democratic states, rarely) to an outbreak of violence.. In the cases of dictatorshipsand semi-democracies, the ruling elites responded to crisis by increasing repression (thereby using one form of violence to abort another).

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DEFICITS ARE KEY TO EMPLOYMENT THIS IS CENTRAL TO A PRODUCTIVE ECONOMY.

Papadimitriou, 99 (Dmitri, President of The Jerome Levy Economics Institute of Bard College, July, Preface toGovernment Spending in a Growing Economy, http://www.levy.org/pubs/ppb/ppb52.pdf page 5)

But is the indiscriminate pursuit of a balanced budget wise? Moududs analysis challenges the theoryunderlying a policy of fiscal austerity. In his view only purist neoclassical models suggest that budget deficitsunambiguously lead to reduced aggregate output and lower employment. Such models typically assume, quiteunrealistically, that there is continuous full employment and full utilization of productive capacity. Becausemodels in the Keynesian and classical traditions recognize that unemployment and unutilized capacity are recurrent phenomena in market economies over the business cycle, they suggest that budget deficits can havestabilizing effects on output and employment . Although proponents of balanced budgets and budget surplusesoften pay lip service to this stabilizing role, it is not clear how fiscal policy can perform that role when strictlimits are placed on spending.

NON-MILITARY SPENDING STIMULATES PRIVATE INVESTMENT AND PRODUCTIVITY.

CONTEMPORARY POLICY ISSUES, 90 (OCT, IS GOVERNMENT SPENDING STIMULATIVE? VOL. 8, ISS. 4; P.30, PROQUEST)

This paper has investigated the implication of distinguishing between public consumption and public netinvestment (on military and non-military equipment and structures) so as to properly assess the importance of fiscal policy to the output level. Public consumption and military investment are of little statistical importanceto gross national product, but net public investment in infrastructure capital has a strong positive effect on theoutput level. One expects public net investment ton non-military items to have such an expansionary effect onoutput through a structural complementary relationship between private and public net capital stocks in the

private production process. Specifically, a rise in public capital accumulation enhances the productivity of private capital. The latter, in turn, stimulates additional private capital investment. Aschauer offers supportingevidence by isolating a strong positive association between the public non-military capital stock and the rate of return to non-financial corporate capital. The latter is measured as the ratio of corporate profits plus net interest

as a return to debt holders to the replacement value of fixed non-residential capital, land, and inventories.

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HISTORY IS ON OUR SIDE GREAT DEPRESSION PROVES THAT GOVERNMENT SPENDINGSTIMULATES THE ECONOMY.

Nadler, 06 (Professor of finance at the Graduate School of Management-, Jan/Feb, DO BUDGET DEFICITS STILLMATTER?The Secured Lender. New York: Jan/Feb 2006.Vol.62, Iss. 1; pg. 52, 4 pgs. Proquest)

As background, remember that budget deficits and surpluses should serve as economic stabilizers under theKeynesian system that we have relied upon for almost 70 years.Harken back to the early days of the New Deal when President Franklin Roosevelt was trying to halt the GreatDepression. Roosevelt had taken office holding the same view as his predecessor, Herbert Hoover: The way tocure a depression was to raise taxes, cut spending and thus balance the budget. With this accomplished, the

populace would regain its confidence in our economy, start spending again and pull us up out of the economicdepths. But as the years passed and the Depression continued, Roosevelt was impressed by the works of JohnMaynard Keynes who held the opposite view: The way to cure a depression was to cut taxes and increasegovernment spending, so the government's expenditures would raise the nation from its economic depths.Roosevelt, who had stated in a speech in Pittsburgh in his 1932 campaign that the way to cure the depressionwas higher taxes and lower spending, now wanted to reconcile this speech with his new opinion that theopposite was the appropriate path. He went to his speech writer, Louis Howe, for help. As the story goes, Howeworked and worked and finally came back to the President and said, "My suggestion is that you deny that youhave ever been in Pittsburgh, and that you deny that you ever said what you said in 1932."After this reversal,our policy of compensating fiscal policy developed as one of the twin means, along with monetary policy of theFederal Reserve, for regulating the economy.Economic gospel from 1936 on was that we should operate withdeficits when the economy needed strengthening and with surpluses when it needed cooling to avoid inflation.In fact, when the economy started recovering later in the decade and Roosevelt tried to go back to his old

budget-balancing policy, the young recovery collapsed. The President was then convinced that Keynes' policieswere the best approach available for stabilizing the economy.

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AFF: SPENDING GOOD TURN: UNIQUENESS ISSUE

-CONTRACTIONARY FISCAL POLICY JACKS THE ECONOMY UNIQUENESS CAN GO BOTHWAYS ON THE TURN.

Business Week, 01 (March 12, Lexis)

Yet another suspect is a contractionary fiscal policy. The current vogue for debt paydown springs from the belief that paying off the public debt gets government out of capital markets and thereby lowers capital costs for

private investment. In theory, this stimulus more than compensates for the fiscal drag of endless governmentsurpluses, especially if the central bank cooperates by easing interest rates. This is questionable economics .Whatever other mistakes he may have made, John Maynard Keynes was correct to point out that prolonged

budget surpluses slow an economy by depressing consumption. Keynes would have agreed that a long boom(the 1990s) that follows a period of excessive debt buildup (the 1980s) is a good time to pay down debt. But he

would have been appalled at the chorus of economists and politicians calling for endless federal budgetsurpluses. As my colleague, author John B. Judis, has observed, the link between the bipartisan deficit reductiondeal and the Fed's looser monetary policy has been widely exaggerated. What really occurred is that Greenspan,

based on his analysis of productivity data, became convinced that the New Economy was capable of higher rates of noninflationary growth and employment. This prompted the Fed to ease interest rates. The fact thatCongress was also cutting the deficit reassured money markets. But it's time to discard the myth that deficitreduction unlocked lower interest rates, which in turn let loose the boom. What really allowed Greenspan to cutrates in the 1990s was higher productivity growth. And that new productivity reflected long-gestating trends intechnology -- not in short-term fiscal policy. Accessory. So who killed the boom? The answer recalls theresolution of Agatha Christie's thriller, Murder on the Orient Express: All of the suspects had a hand in the deed.There's the Fed's overly tight money policy in 1999 and 2000; the stock market coming to its senses; an

excessively contractionary fiscal policy; and an ordinary turn in the business cycle. OPEC, which hiked oil prices at an opportune moment, was an accessory after the fact. Now that the economy is slowing down, it's agood time to rethink fiscal policy. A new policy need not involve the stimulus of George W. Bush's proposed taxcut. It can also take the form of increased public spending . Macroeconomically, we need a stimulus.Politically, there are fundamental choices to be made between tax cuts and valued uses of public outlays --

better health care, child development, affordable housing, and education. Sometimes it's actually good for theeconomy to incur public debt, both to provide a countercyclical stimulus and to finance necessary publicimprovements in education, training, and infrastructure. Even in a mild slowdown, government shouldn't berunning a surplus. Let's hope it doesn't take a full-blown recession for this revisionist thinking to becomerespectable again. Unlike Agatha Christie's murder victim, this economy is far from dead. The good news is thatthe New Economy really is capable of higher non-inflationary growth, if only we have the wit to pursue policies

that let the economy realize its potential. That means both an easing of interest rates and a reconsideration of theconceit that we have to pay off the entire national debt. Otherwise, we will have a very serious recession for which all the suspects can share blame.

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Spending File