Its case Neg ddi 2012 1 Economy Frontline



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ITS Case Neg DDI 2012

1

Economy Frontline

1. Congestion inevitable – mass transit passengers re-establish equilibrium

Joshua Arbury (rincipal Transport Planner at Auckland Council, Past, Heritage Advisor - Planning at NZ Historic Places Trust, Consulant Planner at Resource & Environmental Management Ltd.) 10/30/09

(“Could congestion be a good thing?”, http://transportblog.co.nz/2009/10/30/could-congestion-be-a-good-thing/) chip

This brings us back to the existence of ‘time savings benefits’, and also issues like induced demand that traffic planners and engineers tend to ignore because they upset the simplistic world of “predict and provide” they live in. Fortunately, there are a few smart thinkers out there who have looked at this issue more closely – including a guy called J.M. Thompson in a book called “Great Cities and their Traffic” – who outlines the following (quoted from Mees’s book):Where a road and a rail system compete for patrons, Thompson argues that there will be an equilibrium between the two travel modes which ensures that they are of roughly equal quality. An increase in traffic on the road would raise travel times, encouraging some motorists to shift to public transport, a reduction in traffic would attract passengers from public transport until congestion rises to re-establish equilibrium. This equilibrium can be upset by changes to the quality of either mode. Improving the road system will produce a decline in patraonge of the rail service. This will cause a reduction in service levels, leading to a further decline in patronage. If sufficient rail passengers shift to the road on account of the decline in service a new equilibrium will be reached in which, paradoxically, both road-users and public transport patrons experience a worse level of service than before. Investing in road improvements has actually made everyone worse off.Now aside from extreme situations like horrifically crowded trains in Tokyo, generally public transport works better the more patrons it has (as increased services become viable) while roads perform better the quieter they are. Therefore, taking steps to encourage people to use public transport rather than roads – through shifting the equilibrium in that direction – is likely to result in benefits to everyone.Mees concludes that perhaps the best approach to congestion is for everyone to just relax a bit. There will always be congestion in large cities, but perhaps the focus should be on providing alternatives – as in cities with well developed transport alternatives people will be able to choose whether or not to endure it. The 1993 Vancouver Long Range Transportation Plan takes a similar viewpoint:Congestion is usually considered an evil; however, allowing congestion to deteriorate for single occupant vehicles is a practical method of promoting transit and carpools. More congestion for single-occupant vehicles would magnify the impact of some travel demand management. For instance, buses/carpools in high occupancy vehicle lanes will gain an edge since the relative time saved by escaping lineups will be gone.In fact, I think some level of peak hour congestion is actually probably a desirable outcome. If we had a complete absence of congestion at all times it would surely be a sign of huge over-investment in the roading network (if it was even possible, remembering the effects of induced demand). Places like Paris have more congested streets than a city like Los Angeles, but I’m doubtful that Parisians have poorer access around their city than their Californian counterparts. In fact, it’s likely the opposite is true. Slower traffic encourages alternatives means of transport that are often more sustainable, it encourages shorter trips and thereby encourages higher development densities and more mixed-use development. Which are all good things.¶ In the end, I think it’s stupid, and probably even counter-productive, to attempt to eliminate congestion. Instead, perhaps it’s more prudent to plan for an optimum level of congestion – keeping in mind other environmental, economic and social goals. If we set the equilibrium at the right level, in the end we will all benefit from it.
2. Sequestration

Maryland Department of Transportation 2012

(“DLS Budget Analysis Issues”, http://dbm.maryland.gov/agencies/operbudget/FY2013Testimony/J00.pdf) chip

The sequestration process mandated by the Budget Control Act (BCA) requires Congress to ¶ reduce spending by $1.2 trillion over the next ten years. Reductions will begin in January 2013 and continue through Federal Fiscal Year (FFY) 2021. Of the $1.2 trillion, half of the savings ¶ will be derived from defense programs and half from non-defense programs. Sequestration will impact transportation programs using General Fund monies. Some programs, such as New Starts, receive all of their funding from the General Fund and will see a reduction ¶ on their entire program; others including Highway, Transit and Aviation formula programs are funded with Trust Fund monies, which are exempt from sequestration. As noted in a December 2011 Federal Funds Information for States (FFIS) report, reductions for FFY 13 would be automatically applied across the board, which could result in approximately an 8.7 percent reduction from estimated FFY 2012 levels for non-exempt programs (the actual reduction will depend on the FFY 2013 baseline). For FFY 2014 through 2021, the Congressional Appropriations Committees will have the authority to apply the annual reductions at their discretion.


3. Sequestration means economy collapse inevitable

David Scott (Congressmen of Georgia’s 13th district) 7/24/12

(“Will Congress let automatic spending cuts occur?”, http://blogs.ajc.com/atlanta-forward/2012/07/24/will-congress-let-automatic-spending-cuts-occur/?cxntfid=blogs_atlanta_forward) chip

The Budget Control Act of 2011 was drafted to match spending cuts with targeted revenue increases to prevent the federal government from defaulting on its debts. A short-term solution of $1 trillion in spending cuts was approved, but our long-term budget problems were not solved.Unless Congress finds another way, larger automatic cuts will start. At the end of 2012, massive automatic cuts will slash $1.2 trillion from the budget over 10 years.This budget time bomb, called sequestration, was created as a measure of last resort in the Budget Control Act. It was designed to be painful so that both parties would be forced to negotiate away from partisan orthodoxy on spending and taxes to find agreement on a balanced budget. Unfortunately, that did not happen and we are left with sequestration.The quick enactment of such large cuts will create shock waves in the U.S. economy. I asked Federal Reserve Chairman Ben Bernanke about these cuts in a recent Financial Services Committee hearing. He responded by citing a Congressional Budget Office report that expects 1.2 million fewer jobs if sequestration is implemented.¶ Republicans are concerned about cuts to defense with little care about hits to spending for education, infrastructure or seniors.I, too, care about ensuring a strong national defense, but I also care about a strong nation. These devastating cuts will cause hardships for families and local communities at a time when our economy has not fully improved.¶ Georgia will lose more than $7 million in child care development block grants, which help residents with child care expenses while they work or attend school.Georgia would lose more than $15 million for Head Start and more than $30 million for special education programs. Not only will these education support programs be cut, but the teachers and child care providers also will be fired. A recent study by a George Mason University economist estimated that the state would lose more than 54,000 jobs in defense and nondefense-related jobs.Republicans say they want balanced budgets, yet sign pledges to Washington lobbyists to protect tax breaks for the very wealthy and corporate special interests.They vow to protect every dollar of defense spending while billions of U.S. dollars are being wasted on Afghan warlords and Pakistani armies who support the Taliban and other enemies.We can find ways to carefully pare military spending and still protect America’s borders.There are also ways to preserve tax cuts for middle-income families, while asking millionaires to pay the same rates they paid during the Clinton years.Republicans talk a big game on defense but they don’t want to pay for it. The wars in Iraq and Afghanistan were funded with massive borrowing in the 2000s.While we were sending thousands of men and women into harm’s way, we were spending our surpluses and borrowing more.In addition, taxes were slashed, which created massive deficits. The fiscal situation needs to be repaired before hard-set ideologues bankrupt America.I can respect people who want smaller government, but imploding our economy in the process hampers our ability to plan for future challenges in educating our children, researching new discoveries, and investing in our roads, bridges and ports.We must find agreement now on how to solve these problems.The Constitution was created out of a series of compromises among great leaders.Not unlike today, our history is full of passionate debates on how to build a great America.But it was our forbearers’ ability to work together that made our country strong. We are staring at a fiscal cliff.There is still time to slow down, check our map and turn in the right direction.

4. Economic collapse inevitable- unrealistic media preductions keep the elites on top.

Ron Smith (an American talk radio show host on WBAL, columnist @ The Baltimore Sun) 7/15/11

(“Ron Smith: The only question now is how and when the global economy will collapse”, http://articles.baltimoresun.com/2011-09-15/news/bs-ed-smith-debt-20110915_1_debt-ceiling-global-economy-political-elite) chip

When considering our economic crisis, remember this: The yet unborn and those now too young to vote won't be paying off the debts piled up by the "Greatest Generation," the Baby-Boomers they sired, members of Gen X or any of their other predecessors.Predicting how the future will play out is a fool's game, but I make the above prediction with great confidence. If you haven't yet grasped it, government debt in the U.S., Europe and Japan has grown to such heights that it is literally unrepayable.People play with the figures all the time, but we can be confident that the actual federal debt alone is nearly $17 trillion.The current system is kaput, and the financial and political elite are aware of this, but they prefer financial sleight-of-hand to revolution, which is certainly understandable. However, as we shall see pretty quickly, the game is over, and the only question now is how the collapse of the global economy will take place.All of the political theater over raising the debt ceiling limit can't conceal the fact that the economy in question was built on perpetual debt, created out of thin air. Federal Reserve Chairman Ben Bernanke is wedded to the fantastical notion that creating vast new debt won't affect interest rates. He's promised to keep them at their current levels for two more years, but will the markets allow that to happen?Even should the answer be yes, it does nothing to help Joe and Jill Sixpack as massive unemployment will persist and living standards will continue to fall. All the presidential exhortations to "pass this [jobs] bill now" are hollow words.Job creation is a byproduct of a growing economy, not the cause of one. The wagon cannot pull the horses.The debt ceiling fuss was carried out under the fictive notion that our elected representatives were desperately trying to save our bacon. The way it was represented in the major media was as a clash of disparate political beliefs, with tea party Congress critters cast as the penurious villains gumming up the finely tuned machine of governance.So-called mainstream Republicans were certainly willing to do their usual surrender to the Democrats, but elections have consequences, and the 2010 election of dozens of GOP representatives resulted in a sizable bloc willing to buck the system that had gotten us into this mess in the first place.In the end, though, what was delivered was just another delay of game's end. The nation's elites want the system that has allowed them to loot the economy to continue as long as possible. After all, the financial oligarchy that bought the people that ostensibly represent all of us is still flying high, though I'm certain the members of it are well aware that time is short and they'd better grab all they can before the final whistle blows.Perhaps the biggest story of the week was the release of the Census Bureau's annual snapshot of living standards, which showed that median household earnings have fallen to 1996 levels and that poverty levels are up to more than 15 percent of the population. This is despite 2010 showing a growth of 3 percent in the GDP.You can't fool people about their own diminished circumstances. They're living them.There is a growing anti-federalism afoot, which will undoubtedly play a major role in the elections next year. Democrats are a bit shell-shocked after losing the New York special election Tuesday to fill the seat of the recently departed Anthony Weiner. New York's Ninth Congressional seat has been filled by a Democrat's bottom since 1923.With President Obama's job approval ratings falling to new lows, the Democrats hope to hang onto the White House by having their rivals nominate an unelectable candidate. They think, for example, that Texas Gov. Rick Perry might be an easy target because of his comments about Social Security being a Ponzi scheme and his onetime suggestion that his state should consider secession.We are warned to be careful of what we wish for, and the Democrats may find out in 2010 that what sound like wild-eyed ideas to the establishment are just what voters are looking for.
5. Collapse inevitable- new American Socialism and unlimited corruption

Porter Stansberry (financial publisher, creator of “The End of America”) 6/30/11

Why a Full-Scale Economic Collapse Is Inevitable”, http://www.dailywealth.com/1774/Why-a-Full-Scale-Economic-Collapse-Is-Inevitable, chip

New American Socialism began with the policies of President Franklin Delano Roosevelt.¶ ¶ In 1933, FDR seized all the privately held gold in the U.S. and began creating the massive government programs necessary to implement socialism. To give you some idea of how much the federal government grew during FDR's reign, remember federal spending made up 3% of GDP in 1930 – a level that had been fairly consistent for most of America's history. Almost immediately after his election, he tripled federal spending to more than 10% of GDP. And by the time he died in office, federal spending reached 44% of GDP – an all-time high.¶ ¶ As everyone should know by now, the promises of socialism aren't affordable. Robbing Peter to pay Paul is inefficient and kills Peter's incentives. The result is usually economic stagnation, depression, and eventually a crisis that frees people from the government's confiscatory repression.¶ ¶ Because America was the only large economy standing after World War II, it took much longer than usual for the problems of socialism to appear in our economy. Also, the government scaled back many of FDR's policies during the post-war boom. In winning the war, we also won a generation of economic spoils.¶ ¶ All this changed in the 1960s.¶ ¶ Lyndon Johnson had delusions of government-led grandeur. His ideas of a "Great Society" and "Model Cities," along with an expensive foreign war (Vietnam), were a recipe for massive new debts and an increasing role for government in all aspects of American life.¶ ¶ These policies led to an acute funding problem in 1971, because the debts of socialism couldn't be financed with gold-backed money. It was far too expensive. And so we began a new kind of socialism... the New American Socialism.¶ ¶ What happened in 1971? The size of America's government deficits forced us to abandon gold. After World War II, the U.S. dollar became the world's reserve currency. In exchange for placing the dollar at the center of the world's economy, we made a solemn promise to always exchange the U.S. dollar for gold at $35 an ounce.¶ ¶ Nixon broke that promise, calling our creditors "global speculators" and telling them to go pound sand.¶ ¶ This move away from gold severed the fundamental tie between our economy and our money. Without the link to gold, bank reserves could be created by fiat. And they were. This led to a huge expansion of our money supply and our debts.¶ ¶ The power to use this debt and to control the creation of new money is the most powerful factor in our economy. The government can now create unlimited amounts of credit to control the U.S. economy. This bestows favored status on certain companies – notably banks. This lies at the core of our economy's structure. It is how fiat money privatizes the benefits of New American Socialism.¶ ¶ Most Americans simply don't understand our historic tie to gold made it impossible for the banking system to grow beyond clear boundaries. Gold limited the amount of currency in circulation, which, in turn, restricted how much money banks could lend. Under the gold standard, the maximum total debt-to-GDP ratio was limited to around 150%. But as soon as we broke the tie to gold, our total debt-to-GDP ratio began to grow. It's now close to 400%.¶ ¶ Without the tie to gold, the amount of economic mischief our government could engineer became practically limitless. No social goal was too absurd... no war too expensive... and no government insurance scheme too patently self-serving not to finance.¶ ¶ ¶ Today, New American Socialism has spread like a cancer throughout our country, afflicting industry after industry.¶ ¶ Like a cancer, once it infects an industry, it metastasizes from company to company in that sector. Suddenly, businesses cannot function without massive government aid. These corporate wards of the State weigh down the rest of our economy... making us weaker and less competitive and dragging us further into debt.¶ ¶ Keep in mind, this New American Socialism I'm talking about isn't called socialism at all. It goes by many names. It's been called "compassionate conservatism." It's been called "joint public-private enterprise." It's been called "government insurance."¶ ¶ I've been studying it for many years – finding it in one company after another. I've actually preferred having it in many of the stocks I've recommended over the years because it tends to be good for investors.¶ ¶ That's the most insidious thing about New American Socialism: It's a form of socialism that leaves the profit motive in place.¶ ¶ That's why the New American Socialism has grown decade after decade. That's why it continues to be heavily promoted by almost every mainstream media outlet and both political parties.¶ ¶ It leads to a kind of corruption I believe will be impossible to stop without a full-scale economic collapse.
6. Economic decline inevitable- sequestration of military and infrastructure

Brian Darling (a senior fellow in government studies at The Heritage Foundation, a conservative think-tank based in Washington, D.C. Darling has been involved in U.S. politics since the early 1990s, in roles as a congressional aide, lobbyist and legal counsel) 5/7/12

(“To Sequester or Not to Sequester: That is the Question”, http://townhall.com/columnists/briandarling/2012/05/07/to_sequester_or_not_to_sequester__that_is_the_question/page/full/) chip

Many in Congress don’t believe in Ronald Reagan’s idea of “Peace through Strength.” Our nation needs to spend roughly 4% of Gross Domestic Product (GDP) on defense to be able to preserve freedom. President Obama’s budget envisions chopping defense spending down to about 2.5% of GDP by 2022, and this does not account for the sequestration. Yet American liberals seem intent on using cuts to missile defense and other defense infrastructure programs as a means to curry favor with our enemies and to pay for liberal domestic priorities.Rep. Paul Ryan (R-Wis.) is fighting to undo the ill-advised agreement that lead to the debt limit increase. His “Sequester Replacement Act,” H.R. 4966, is being considered this week by the House Budget Committee, in anticipation of full House consideration. After the House passes this legislation, it will take up another bill to replace, among other cuts, the defense cuts with mandatory non-defense cuts over the next decade and discretionary cuts for Fiscal Year 2013.¶ Clearly, there is waste in the defense budget, yet scheduled cuts will do nothing to get rid of specific instances of waste, fraud and abuse in the Pentagon. In July of 2011, Sen. Tom Coburn (R-Okla.) put out a plan titled Back in Black with over $1 trillion in defense cuts. Senator Coburn is correct to argue that “the Department of Defense can and must play a role in bringing our budgets into balance.” Many conservatives, me included, don’t agree with all of Coburn’s proposed cuts, but he puts some common sense cuts on the table.Coburn points out that the federal government could save $9.1 billion over 10 years by consolidating the administration of 252 grocery stores run by the Defense Commissary Agency and retail stores. The Senator also found $10 billion in savings by closing down the Domestic Dependent Elementary and Secondary Schools (DDESS). There is no rationale for having military-run schools in the United States.The problem with the sequester is that the Defense Department will not include Coburn’s ideas for cuts. Sequestration will hurt major modernization programs of the Department of Defense. The Heritage Foundation identified over $200 billion in cuts in the Saving the American Dream plan, but because we have underinvested in modernizing for so long that we need to take any savings and reinvest that money in defense -- not take it off the top line.Rep. Buck McKeon (R-Calif.), chairman of the House Armed Services Committee (HASC), put out a fact sheet arguing that the Sequester would be “catastrophic” and an “unacceptable risk” with “disastrous consequences for soldiers, veterans, national security, and the economy.” Rep. Randy Forbes (R-Va.), chairman of the HASC Readiness Subcommittee, is looking for ways to protect ships, military vehicles and aircraft from being sequester targets.Forbes introduced H. Res. 441 arguing that further reductions in core national security funding will harm U.S. interests. The resolution memorializes the fact that decisions on cuts will not be based on “an assessment of the threats” faced, but on “budgetary pressure.” With our military in dire need of modernization, this is not the time for politically motivated cuts.
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