The people who pass for our leaders and the slime who pretend to be journalists in this country are revolting and despicable in their use of propaganda, misinformation and outright lies to scare the American people into believing fractional reductions in the rate of spending increases will devastate our society, leave senior citizens starving in the streets, and leave our country undefended from the imminent invasion of Iran. This entire sequester kabuki theater is nothing but a farce. Are there any adults left in this country willing to address the real problems and make tough choices? There are no good choices left, only less worse.
The Non-Existent Spending Cuts Wrought By The ‘Devastating’ Sequester
By Bill Wilson
In a city known for its perpetual evasion of responsibility and chronic shifting of blame, Washington D.C.’s sequester debate is more of the same – albeit with an interesting twist.
Ordinarily spending debates in our nation’s capital can be scripted long before they unfold: Democrats accused Republicans of “divisive,” harsh” and “burdensome” cuts, while Republicans stride hurriedly past television cameras with not-so-bright looks on their faces.
Meanwhile the legacy press goes into overdrive exaggerating the impact of these “cuts” – demonizing any politician who dares to support them as the equivalent of a puppy murderer. At this point Republicans invariably cave under the pressure – and the burden of both parties’ bad decisions gets shifted even further onto future generations of taxpayers.
Sound familiar?
“Members of Congress who would otherwise like to cut spending know they’re going to take a beating from the media and special interests,” concludes The Cato Institute’s Tad DeHaven. “Few politicians are willing to take that heat. Fewer still can even articulate why spending cuts and smaller government are good.”
This basic storyline – played out time and time again – is directly responsible for our nation’s $16.5 trillion debt, its soaring deficits, its unfunded liabilities and its inability to sustain anything resembling a real economic recovery. In fact the $630 billion tax hike associated with the recent “fiscal cliff” deal is the latest example of our economy paying the price for politicians’ refusal to rein in spending.
But the current debate over sequester – an across-the-board $85 billion reduction of budget authority which translates into just a $53.8 billion cut to outlays this fiscal year ending September 30– is notable for both its unfounded hysteria as well as a surprising role reversal.
To recap, the sequester was originally supposed to total $109 billion – but lawmakers delayed its onset by two months during the fiscal cliff negotiations. Now U.S. President Barack Obama – who first proposed the sequester as part of the 2011 debt ceiling deal – wants to delay it again.
According to Obama, the sequester would represent “a huge blow to middle-class families and our economy as a whole.” Obama’s White House has also referred to the sequester as “devastating,” saying its cuts would “imperil our economy, our national security (and) vital programs that middle class families depend on.”
Sounds frightening – but is it true? Of course not. According to The Wall Street Journal ”federal domestic discretionary spending soared by 84 percent with some agencies doubling and tripling their budgets” during Barack Obama’s first two years in office. In fact the sequester would scale back just one of every six dollars in discretionary spending increases since 2008 – hardly a “huge blow.” Also, discretionary spending in 2008 was already tremendously inflated – having increased by more than 60 percent over the previous eight years.
In other words this isn’t even really a cut – “devastating” or otherwise – it’s a modest growth rate reduction following years of unnecessary, embarrassing and unsustainable excesses.
Where the sequester debate deviates from the norm is in its dramatis personae. Unlike prior spending debates, the sequester features Republicans attempting to shift the onus for cutting government onto Obama. U.S. Speaker John Boehner has repeatedly referenced “the president’s sequester” while decrying its “harmful cuts.”
What hypocrisy. Obama and Boehner both supported the sequester as an excuse for yet another unsustainable run-up of our nation’s credit limit – which exhausted its latest $2.1 trillion increase last December (after less than seventeen months).
“The debt ceiling deal in 2011 was agreed to by Republicans and Democrats, and regardless of who came up with the sequester, they all voted for it,” U.S. Rep. Justin Amash (R-Michigan) said recently. “So, you can’t vote for something and, with a straight face, go blame the other guy for its existence in law.”
Exactly. Boehner and Obama’s game of “pin the tail on the sequester” ignores not only their shared support for the measure – but also their shared responsibility in overstating its impact.
More to the point it highlights the extent to which leaders of both parties in Washington, D.C. are abandoning taxpayers in order to curry favor with the legacy media and special interest establishment – both of which are dead set against any reduction in the size and scope of government.
Bill Wilson is president of Americans for Limited Government.
KaD says:
The Fed is now the fifth largest country in the world: http://investmentwatchblog.com/the-fed-is-now-the-fifth-largest-country-in-the-world/
Generational theft must stop: http://www.zerohedge.com/news/2013-02-21/stanley-druckenmiller-we-have-entitlement-problem-and-one-day-feds-hamster-wheel-wil
The growing debt burden threatens to crush the next generation of Americans.
Coming out of the most recent elections, no consensus emerged either to reform the welfare state or to pay for it. And too many politicians appear unwilling to level with Americans about the challenges and choices confronting the United States. The failure to be forthright on fiscal policy is doing grievous harm to the country’s long-term growth prospects. And the greatest casualties will be young Americans of all stripes who want—and need—an opportunity to succeed.
Three main infirmities plague Washington and constitute a clear and present danger to the prospects for the next generation.
First, the country’s existing entitlement programs are not just unaffordable, they are also profoundly unfair to those who are taking their first steps in search of opportunity. Social Security is one example. According to Social Security actuaries, the generational theft runs deep. Young people now entering the workforce will actually lose 4.2% of their total lifetime wages because of their participation in Social Security. A typical third-grader will get back (in present value terms) only 75 cents for every dollar he contributes to Social Security over his lifetime. Meanwhile, many seniors with greater means nearing retirement age will pocket a handsome profit. Health-care spending through Medicare represents an even less equitable story.
The government has an obligation, of course, to support needy seniors. But this pension system is ripe for common-sense reforms, including changing eligibility ages and benefit structures for those with greater means, ridding the Social Security disability program of pervasive fraud, and removing disincentives for those who would rather work in their later years.
Powerful, vested interests portray reformers as avowed enemies of seniors. But, the status quo is, in fact, tantamount to saddling school-age children with more debt, weaker economic growth, and fewer opportunities for jobs and advancement.
Second, while many in Washington pay lip service to the long term, few act on it. The nation’s debt clock garners far less attention than the “fiscal cliff” clock. Elected officials continue to allow the immediate to trump the important. Washington appears poised to forego fundamental reform at the altar of the expedient, yet again. This could have tragic consequences.
In successive administrations, the country has spent trillions in temporary tax credits and short-term “stimulus” to goose growth by the next election. What do we have to show for this spending surge? Modest growth, declining incomes and a level of national debt that undermine our long-term prospects.
The Federal Reserve’s policies reinforce this short-term orientation. To offset weak economic conditions, the Fed’s principal policy objectives appear to be twofold: suppress interest rates and raise stock prices. As a result Congress may be missing market signals and failing to see the costs of its spending addiction in time to undertake real reforms. Ultimately, economic fundamentals—not the promises of central banks—will determine the prices of stocks and bonds.
But the deeper failing is one of essential fairness. The benefits of rising stock prices accrue to those who have already amassed wealth at the expense of those who are struggling to save. And failing to deal with runaway spending will burden the country’s children with higher interest rates and a debt bomb that will come due in their lifetimes.
Third, too many politicians appear more eager to divide the spoils of electoral victory among their own than to increase the size of the economic pie for all. The grab-bag of special tax favors under the guise of the recent fiscal-cliff deal is only the latest example.
Crony capitalism and corporate welfare aren’t just expenses we cannot afford. They are an anathema to economic growth. They deny opportunities to aspiring people and companies who seek to better their lot. They ration opportunity based on things other than merit and hard work. They further ensure that poor children—who already are disadvantaged by failing schools, inadequate health care and little access to necessary resources—will never get the chance to break the cycle of generational poverty through education.
Some individual Americans are surely better off than they were many years ago. The more probing question is whether America is better off. That can only be true if the hopes and aspirations of the next generation are achievable.
The country must find the courage, conviction and compassion to fix what ails it. The opportunity to advance real reform is still possible. But failure to reform the entitlement culture, reaffirm long-run objectives, and re-establish a common purpose will mean a dimming of opportunities for American children today and for future generations. And a great nation will have ceded more than its greatness, but its goodness.
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24th February 2013 at 12:25 pm
Stucky says:
THE GREAT SEQUESTER PANIC
By: Rich Lowry
February 21, 2013 12:02 AM EST
Prepare for the end of food safety as we have known it. For a breakdown in public order. For little children languishing in ignorance. If only Edward Gibbon were here to chronicle the devastation. On March 1, the fabric of our civilization begins to unwind.
That’s when the economy begins to stall and we turn our back on our values, all because the federal government will have to begin to cut a few tens of billions of dollars from the largest budget the world has ever known.
This is the lurid fairy tale spun by President Barack Obama. In the fight over the sequester, he is resorting to the tried-and-true (and tiresome) strategy of every official confronted with budget cuts he doesn’t want to implement, from the commander in chief to a lowly bureaucrat toiling at some school district: maximize the scare-mongering and pain.
In Hans Christian Andersen terms, Obama is the princess and the sequester is the pea. Over the next 10 years, the sequester amounts to a $1.16 trillion cut, or roughly 3 cents on every federal dollar. If we can’t squeeze a couple of pennies out of every dollar, we might as well begin our great national bankruptcy proceedings right now.
This year we are supposed to cut $85 billion from a $3.5 trillion budget. And it won’t even be that much. According to the Congressional Budget Office, the federal government won’t be able to cut the full $85 billion. It will manage to cut only about half that in 2013.
As Yuval Levin of the journal National Affairs points out, even with the sequester, the federal government will spend a little more in 2013 than in 2012, $3.553 compared to $3.538 trillion. Welcome to the Age of Austerity.
Even with the sequester, nondefense discretionary spending will still be up almost 10 percent since 2008. Even with the sequester, federal spending is projected to be a robust 22.8 percent of gross domestic product in 2023. Even with the sequester, the debt will hit 100 percent of GDP just two years later than it would otherwise, according to the Bipartisan Policy Center.
It’s hard to see how a cut of a little more than $40 billion this year can possibly tank a $16 trillion economy. Or why keeping the deficit the same it is projected to be this year, at about $845 billion with the sequester cuts already accounted for, will be a shock too severe for the economy to take.
None of this should be taken as a brief for the sequester as policy. It is a classic instance of Washington coming up with a stupid kick-the-can compromise and then proceeding to have an even stupider debate over what to do next. Republicans want to blame President Barack Obama for the idea of the sequester, even though they signed onto it as part of a bipartisan deal to get past the debt ceiling showdown of 2011. Do they think that no one will remember that they voted for the deal?
The bastard spawn of the debt ceiling fight, the sequester is designed to be crude and unappealing to all sides. It disproportionately and thoughtlessly hits defense spending and domestic discretionary spending. There is very little to recommend it — except that it is actually a spending cut in a Washington where that is the rarest of creatures.
Ideally, Congress and the president would agree on more targeted and intelligently crafted savings. But the President insists on more tax increases. The other day he said a cuts-only replacement for the sequester would be as absurd as a taxes-only agreement on overall deficit reduction. Yet he exacted a taxes-only agreement from Republicans over the fiscal cliff, with nary a concern about making the deal more “balanced.”
Since Republicans rightfully aren’t budging on tax increases so soon after giving the president a tax hike that hit 77 percent of households (thanks to the expiration of the payroll tax cuts), the sequester seems certain to happen. Presumably, its cuts will be more rationally allocated at some later date. For now, to paraphrase Phil Gramm talking about Gramm-Rudman-Hollings, his own budgetary blunderbuss from the 1980s, the sequester is a bad idea whose time has come.
© 2013 POLITICO LLC
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24th February 2013 at 12:46 pm
sangell says:
Air Traffic Control will collapse and planes will collide and bodies will fall from the sky like rain. Federal employees will descend into poverty and their children will be reduced to emaciated waifs with untreated medical conditions as a result of unpaid furloughs that could range from 12 to 22 days per year. The HUD secretary warns the entire real estate industry could collapse as FHA loans will not get processed. Even a BLS economist wails in the Washington Post that furloughing her could cause a global financial collapse if the markets are not supplied with fresh fake numbers from her office.
It is even possible sequestration could lead to the extinction of the human species as famine, pestilence, terrorism and nuclear war all simultaneously erupt as our vital government agencies are left powerless to intervene by the draconian cuts in their budgets.
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24th February 2013 at 1:07 pm
Steve Hogan says:
We aren’t going to pay down the debt, because we can’t. We will either default through non-payment or through inflation. Those are the two options.
If we do the honest thing and level with our creditors (the people foolish enough to continue lending to the most reckless entity on the planet – the US government) and re-structure the debt, then maybe future generations won’t be saddled with crushing bills they weren’t responsible for.
The tried and true alternative is to debase the currency and wipe out what’s left of the middle class. Since this is the dishonest option, I put my money on the political class choosing this route.
Either way, government spending is going to collapse. The parasite has killed the host.
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24th February 2013 at 1:21 pm
card802 says:
I so bad want sequester to happen.
I’m tired of the deal’s, I’m tired of compromise, I’m tired of the drama, I’m tired of the can kicking.
Shit or get off the pot.
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24th February 2013 at 1:27 pm
Administrator says:
sangell
That is a fine piece of sarcasm. I think you have a future writing articles for ZH.
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24th February 2013 at 1:57 pm
Thunderbird says:
All I am asking is to be able to start a business without government permission and supervision. All I am asking is to be able to practice my trade without government permission or supervision. All I am asking is to be able to build a workshop on my property without government permission and supervision.
Being able to do these three things would create an economy and prosperity for the average person in our country. Government controls and government protected monopolies of large corporations have created the mess we are in.
Government supports corporate monopoly and that is what has ruined small business. One big example: If a mom & pop hardware store or small contractor could purchase merchandise, parts, or supplies at the same wholesale price as Home Depot or any of the corporate big box stores, then a level playing field would exist, and the successful retail sales and services would depend on customer service and reputation. Something that used to be in the past.
If you say Home Depot deserves paying a lower price for a widget because they are buying in a larger volume you are missing the point. And this is why Moses in the wilderness destroyed the golden calf built by a group of cunning Hebrews… then killed the cunning Hebrews.
It is all about morals. Without morals descent society breaks down and the general population suffers under the greater advantage the rich have because of their money. This is what is happening in our present society. There is nothing wrong with being rich. The place of government is to create a level playing field for everyone. This government at all levels is not doing that. Instead it wants to control commerce and it is using the large corporations to do it. It could care less about small business. Someone please give me an example where city, country, State, and Federal government is giving small business a break by relaxing their back breaking regulations? Small business has to put up with four levels of government telling them what to do and at the same time extracting all types of taxes out of them. Then they also have to compete with the monopoly corporations that under price them because they can purchase cheaper at wholesale.
Tell me if this is not communism? Where is freedom? Government is the problem. People that support this type of government are not true Americans, they are communists weather they like the term or not.
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24th February 2013 at 2:12 pm
AWD says:
What could be better? Let the whole fucking Federal government shut down and see if anyone notices. Fuck them and their stealing from people that work. Fuck the FSA and people living off people that work. Let the criminals in Washington choke on all the debt the created and die.
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24th February 2013 at 3:44 pm
DaveL says:
Obama’s biggest fear. What if we had sequestration and nobody noticed?
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24th February 2013 at 7:17 pm
Administrator says:
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24th February 2013 at 3:41 pm