President Obama today warned that the “brutal” budget cuts in the looming “sequester” — the latest Republican-manufactured hostage-taking crisis — will take a “meat-cleaver” to government and cost “hundreds of thousands” of jobs. He proposed eliminating tax loopholes and … other budget cuts … as a solution, calling it a “balanced” approach. He has even offered up cuts in Medicare and Social Security.
Common sense might suggest that if a thug is holding a kid hostage and demanding money you don’t offer him half the money and say he can shoot half the kid. That is a “balanced” response to hostage-taking. But it is not the correct response.
The Sequester — 750,000 Jobs Lost
The “sequester” is yet another manufactured “crisis.” This time a series of harsh budget cuts will occur at the end of February unless House Republicans decide not to do that. This “crisis” is the result of a bargain that came in response to the “fiscal cliff” hostage-taking, manufactured crisis, which was the result of the “debt-ceiling” hostage-taking, manufactured crisis.
According to The Washington Post, in Obama presses Congress for stopgap sequester fix, the cuts “could be devastating for government contractors, civilian employees and the overall economy”:
While the reductions — the first of $1.2 trillion set to occur over a decade — may start March 1, they would only be felt over time. The cuts ultimately could be devastating for government contractors, civilian employees and the overall economy, which economists say could lose 750,000 jobs as a result.
What effect will yet another manufactured “crisis” — this one costing as many as 750,000 jobs — have on business and consumer “confidence” and optimism? This could nip a reigniting economy in the bud. John Cassidy sums it up at the New Yorker’s Rational Irrationality, in ECONOMIC OPTIMISM VS. THE SEQUESTER,
Most Americans haven’t realized it yet, but there’s a good deal of positive news about the economy. Four years after the nadir of the Great Depression, disposable income, consumer spending, and corporate investment are all expanding at a decent clip. Employers are hiring more workers, and, perhaps most importantly, the housing market, which has been the biggest drag on the recovery, is finally turning around.
[. . .] As the economics team at Goldman Sachs pointed out last week, the household debt-to-income ratio is now back to its 2003 level—a little over a hundred per cent. And with interest rates at historic lows (thanks to the Fed), the amount of money that people have to devote to interest and principal repayment has fallen sharply. In 2007, households were paying close to fifteen per cent of their incomes on servicing their debts; today, it’s about 10.5 per cent—the lowest figure since 1983.
With the value of people’s investments in stocks and real estate both rising, all of this means that the underlying outlook for consumer spending, which makes up more than two-thirds of G.D.P., is pretty good.
… Unfortunately, we can’t avoid the fiscal gridlock in Washington, which is now the single biggest threat to the recovery.
Deficit Already Falling Dramatically
The budget deficit is already falling at the fastest rate since the end of WWII. In fact that there would be no deficit at all except for the Bush tax cuts, Bush doubling of the military budget, the Bush hand-out to drug companies in the Medicare Prescription Drug, Improvement, and Modernization Act, and the after-effects of the Bush crashing of the economy. Remember, we had a budget surplus before Bush. (See Did Bush Leave Us Bankrupt, Corrupt, Ungovernable?)
The economy is reigniting and the deficit is already falling dramatically. Why give in to this manufactured “deficit” scare and cut the things We, the People do to make out lives better — also known as government? What about taking the case to the people and demanding that we just drop this whole sequester idea?
President Proposes … Cuts?
But instead of proposing just not doing the sequester at all, the President has proposed what he calls a “balanced” approach of further cutting deficits by eliminating tax loopholes for corporations and the wealthy and … in spite of election results and every single poll … cuts in programs that We, the People absolutely depend on.
To avert the sequester, President Obama offered budget cuts and closing tax loopholes. Yahoo: Obama: ‘Meat-cleaver’ sequester will savage jobs,
Obama has repeatedly called for a blend of spending cuts chiefly affecting entitlement programs like Medicare and new tax increases achieved by targeting loopholes that chiefly benefit the wealthy and rich industries.
Republicans Insist On … Tax Cuts?
Meanwhile Republicans insisted on tax cuts:
“We should close loopholes and carve-outs in the tax code, but that revenue should be used to lower rates across the board,” the Republican leader said.
The right answer is not to negotiate at all with hostage-takers. That only encourages more hostage-taking, and muddles the public’s understanding of just who should be held accountable for what.
Follow me and CAF on Twitter: