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Sequestration Obscures Fiscal Reality

The “Fiscal Cliff” was supposed to be a failsafe mechanism. Unfortunately, it now appears likely to fail.

Just the threat of a sequester was supposed to ensure bipartisan consensus between Congress and the White House on a host of contentious issues of taxes and spending.

Yet the term “compromise” has become a dirty word in Washington. Therefore, not much gets done.

However, regardless of sequestration, the lion’s share of the U.S. Budget will go unscathed. This is because entitlement spending and interest on the national debt comprise most of the budget pie as well as future outlays.

Petty Politics

Therefore, today’s petty politics continues to take precedence over rational governing. This partisan political folly is detrimental to the American people, the U.S. economy and global markets (which cower at the notion of U.S. economic uncertainty and fiscal instability).

Both chambers of Congress have abdicated responsibility and accountability by preferring to antagonize their political opponents rather than compromise in good faith. This is nothing short of Washington gone wild!

The resulting political environment in Washington has become so toxic that Congress chose to skip town for an extra-long vacation which began over President’s Day weekend and won’t end until the week of Feb. 25.

In effect, Congressmen and women went AWOL on the American people — whom they purport to represent – even as the nation edges closer to falling off the Fiscal Cliff.

This leaves Congress with only a few short days to take meaningful legislative action to avert the Fiscal Cliff – even if that means merely kicking-the-can down the road once again.

Sequestration Obfuscation

The irony here is that sequestration only affects discretionary spending by government agencies, which is an exceedingly small slice of the overall budget pie. The $85 billion in automatic cuts, across-the-board and government-wide, will neither make a dent in the ballooning national debt nor erase the budget deficit.

The last time America boasted a budget surplus was during the Presidency of Bill Clinton.

To truly get America’s fiscal house in order, Congress and the President know they need to put petty politics aside and bravely tackle historic entitlement reform – that is, the future solvency of Medicare, Medicaid and Social Security (the non-discretionary spending that increasingly engulfs most of the government budget – in addition to paying an ever increasing amount of interest on the national debt).

Sequestration obscures fiscal reality because it won’t address the macro issues at the heart of the budget deficit and national debt. Sequestration is therefore the political equivalent of putting a Band-Aid on a gaping wound gushing blood. It won’t really help and will likely do more harm than good.

Widespread Economic Pain

Going over the Fiscal Cliff will negatively impact far more people than just federal employees. The economic pain will be felt by most Americans as it trickles down to all levels of the middle class and the poor.

When public sector employees don’t get paid they spend less money, and perhaps even stop paying big bills like the mortgage or rent. This hurts consumer confidence and drives up costs for small businesses, potentially resulting in private sector layoffs as well as an abrupt halt to hiring.

Yet interestingly enough, as always, the rich and super rich will escape the most economic harm — a category most members of Congress easily fall into.

The bottom line here is that going over the Fiscal Cliff will sucker punch the U.S. economy in the gut, perhaps even resulting in renewed recession – a worst case scenario.

This is serious business, but don’t tell that to our pathetic politicians in Congress who are supposed to be doing the people’s business.Precarious Predicament

We know by now that sequestration has led to partisan finger pointing, which will only become more widespread. But who is really to blame for this precarious predicament?

We all are – yes, that’s right.

Why? Because too many Americans ignore the political process altogether and don’t even register to vote. Further, many eligible voters don’t bother to vote either because of political cynicism, indifference, frustration, or just plain laziness.

Those who go to the ballot box include a large number of party activists who continue to naively elect and reelect members of Congress who do next to nothing – lest play politics, engage in pork barrel spending, and raise money for their next campaign.

Thus Congress continues to place political self-interest over the interests of the American people.

This is not how an effectively functioning democracy ought to work.

DBG

* NOTE: This post is excerpted from a version originally featured on the social media site Politix.

** All views and opinion expressed herein are those of the author only.

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Profile Photo David B. Grinberg

According to CAP, the Center for American Progress (CAP), sequestration will cause serious damage to the U.S. economy:

  • “The U.S. economy shrank by 0.1 percent in the fourth quarter of 2012—a bad omen for the economic recovery achieved since the end of the Great Recession in 2009.”
  • “After growing 3.1 percent in the preceding quarter and 2 percent on average in the previous four quarters, the U.S. economy is on the edge of recession once again”.
  • “This abrupt slowdown of the economy is taking a national economic toll—largely resulting from the repeated fiscal cliffs and crises that have thrown a wrench in the path of sound management of the government’s fiscal policy.”
  • “With the economy needing $900 billion more demand to operate at full employment levels—the GDP needed to get unemployment down to 5 percent.”

  • “The sequester is set to do more damage to the U.S. economy if politicians fail to stop it. Figure 1 [below] shows that the projected effect of the sequester will be to lower U.S. economic output by $287 billion from where we would be without any fiscal contraction—barely ahead of where the U.S. economy was at the end of 2012.”

  • “The U.S. gross domestic product stood at $15.8 trillion in the fourth quarter of 2012. In the fall of 2012, the Congressional Budget Office estimated that if Congress were to reverse the series of tax changes and spending cuts due at the start of 2013—known collectively as the fiscal cliff—it would boost real GDP by 3 percent, or $16.3 trillion, by the fourth quarter of 2013.”

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Profile Photo Janina Rey Echols Harrison

Great post and followup. I have been posting the same info in many blogs about the sequester. I think the thing that is driving me nuts right now is the call for the President’s plan. That isn’t his job!

The last quarter had to shrink as people get concerned that they will take us over the cliff. I know I tried to set up a buffer of savings, just in case.

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Profile Photo David Patrick

Yes, we continue to reelect members of congress who do next to nothing, who work part time, spending the rest of their time campaigning for their jobs on our dime. I’ve always said politicians are not the people who should be running our country.
But what choice do we have? Almost every time, politicians are the only people on the ballot. The people who should be running the country are growing businesses and researching in their labs and inventing the products of the future in their shops and educating our future society. Those people also like to collaborate, work together, solve problems, get things done and make things happen. They develop best practices and write books and blogs about efficiency, collaboration, resolving differences and achieving success. Some of these people are energetic and charismatic, some are quiet and thoughtful, some are people of action and some are analytical. And they all find their own way to contribute to the success of this great nation.
Those are the people who should be running the country. But why on earth would those people run for Congress? The people who run for Congress must enjoy being in front of people, giving speeches and creating photo ops (sometimes fake). They build their campaign based on what will get the most votes. They develop catch phrases and ads that put down their opponents. They watch their opponent for any slip-up, any misspeak in the present or past that they can magnify or mock to their own advantage. They seek out those who agree with them and avoid opposing viewpoints. They energize crowds by proclaiming their unwillingness to compromise. They sidestep tough questions. They must act like they have all the answers.
To run for Congress, you must be that kind of person, a person who can play politics. The people who should be running the country would never play that game. Those entrepreneurs, scientists, inventors and teachers would never sign up for such a job. They would hate working in the Congressional environment. They would be frustrated out of their minds with the endless stalling, the games, the wasted time and energy with no progress.
I would certainly vote for these people, the people who should be running the country. But almost certainly, they will not be on the ballot.

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Profile Photo Henry Brown

Heard an interview on a local news radio station this morning, and I am going to attempt to accurately quote the honorable congressman Kevin Brady, R-The Woodlands
~”sequester is NOT a bad thing and federal employees who are going to get furloughed need to understand that some people need to pay for the wasteful spending, and if it is government employees that is better than private sector employees”~

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