It’s time to bury theory of ‘starving the beast’

By Sara Bloomberg

The Guardsman

City College was slapped with the threat of closure last July, in large part because it drained its reserves in an attempt to maintain classes, jobs and support services at a level that the San Francisco community needs.

Although not an example of deficit spending, City College is a public institution that relies heavily on public funding.

In November 2012, San Francisco voters proved that City College is worth every penny when they approved Proposition A, which will bring the school an estimated $16 million annually for seven years.

Is City College too big to fail?

This is the wrong question.

Instead we should ask, “Why should we save City College?”

It’s too important for poor and working class people who might not otherwise have access to more expensive universities, and it’s too important for the businesses who hire entire workforces trained at the school.

“Every public education institution shouldn’t be too big to fail,” AFT 2121 President Alisa Messer told the Guardsman in February. “It’s not because it’s too big, but because it’s too important to lose.”

She’s right.

California’s community colleges are too important to lose but if the state doesn’t step it up in terms of funding, these public institutions will disappear.

Governor Brown’s Proposition 30 guarantees much needed additional funding for public schools—both K-12 and higher education institutions—for eight years. The state’s 112 community colleges expect to receive $200 million in the first year.

Although the funding is desperately needed, what will happen in eight years—or seven in the case of Prop A—when these laws expire? Students, teachers, workers, administrators and community members will have to fight for more funding or face severe budget cuts.

In 1978, Alan Greenspan articulated the idea that “starving the beast”—cutting taxes to reduce the amount of revenue available —will eliminate so-called excessive government spending through the powers of free market forces.

Californians passed Proposition 13 that same year. It changed the way public education was funded by capping property tax rates and removing local control of funding.

Ronald Reagan applied the theory on a national level during the 1980s and fiscal conservatives have relied on it ever since.

“Starving the beast” doesn’t work.

It hasn’t worked for Jamaica since the 1970s—although neocolonialism is also to blame for the country’s social and economic problems. It’s not working for Spain, Greece, Britain, Ireland or the United States, either—to name a few countries that have been struggling with weak economies over the past several years.

Our national economy has been picking up and unemployment is steadily decreasing despite efforts by the Republican party to derail sensible economic policies.

In April, a team of researchers at the University of Massachusetts at Amherst discovered major errors in a 2010 study that has been used by pro-austerity evangelists as a justification for their gospel.

The 2010 study claimed that countries with public debt exceeding 90 percent of their gross domestic product experience declining economic growth, which implies that reducing national deficits by cutting expenditures would reverse that trend.

However, when researchers in Massachusetts corrected the original errors, they discovered that the data told a different story. Instead of hindering growth, deficit spending actually propelled growth.

Spending on “jobs now [and] deficits later was and is the right strategy. Unfortunately, it’s a strategy that has been abandoned in the face of phantom risks and delusional hopes,” New York Times columnist Paul Krugman wrote in 2011.

It seems we’re coming full circle from the days of President Franklin Delano Roosevelt. He knew that spending funds on public programs was an important part of stimulating the economy during the Great Depression.

As the economy slowly improves, let’s not forget these lessons from history.

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