Sunday, March 20, 2011

Walker defies Reality? Logic tells you cuts in income would mean cuts in discretionary spending.

I don’t know if the study below takes into consideration the EXTRA spending we’ll have to do to cover the gaps created by Walker’s budget cuts, but either way, there may be trouble ahead.
WSJ: Gov. Scott Walker's plans to balance the state budget by cutting spending and public workers' take-home pay will slow the state's economic recovery, according to projections by a UW-Madison economist. 
An estimated 21,843 jobs will be lost over the next year or two as public agencies and workers are able to spend less in their communities, said Steven Deller, a professor of applied economics who studied the ripple effects of Walker's budget-repair bill and two-year budget proposal. 
"That's not just a bump in the road," Deller said. "That's a speed bump." 
His projections are based on the budget repair law, which requires the compensation cuts, and Walker's proposed two-year budget, which cuts spending in areas such as medical care for the poor and elderly, local governments, schools and prisons. 
Many workers say there is no doubt they'll spend less money in their communities.
"We're not going to be going out to eat much. We won't be traveling as much. We'll be focusing on just the essentials," said Madison sixth-grade teacher Nichole Von Haden, 31, adding she and her husband, a private-sector worker, will sock away their tax refund this year instead of splurging on anything.
If too many teachers, snowplow drivers, correctional officers and other public employees … worries and (who) cut back sharply on spending as a result, the economic recovery could further stall in Wisconsin, Deller said. 
"It is conceivable that people overreact and really pull back in anticipation of this, and that could derail the recovery for a long time," he said.

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