Associated Press
The U.S. economy shrank in the final three months of 2012, and we know exactly why: government spending cuts took capital out of the system and caused a slight contraction. Similarly, the non-partisan Congressional Budget Office reported yesterday that economic growth will be weaker than it should be in 2013 because of "fiscal tightening," including "scheduled automatic reductions in federal spending."
The conversation on Capitol Hill is so ridiculous, it no longer resembles reality in any meaningful way. Congressional Republicans insist they want to improve the strength of the recovery. How? By cutting spending that undermines the strength of the recovery.
In related news, Republicans also believe no exercise and excessive eating is an effective weight-loss method.
The dirty little secret is that the fiscal status quo is working quite well, at least insofar as it's achieving its intended goals -- policymakers have cut spending and raised revenue, which is supposed to reduce the deficit, and which is reducing the deficit. Indeed, the fiscal difficulties Republicans created during the Bush/Cheney era have been largely resolved, with deficits that are projected to keep shrinking and debt levels that are stabilizing.
The problem, of course, is that there are two competing issues that are incompatible -- policymakers can focus on improving the nation's finances or strengthening the recovery. Emphasizing one is detrimental to the other. If the nation wants faster growth and lower unemployment, policymakers are going to have to stop taking money out of the economy.
It's a concept Republicans just can't wrap their heads around.
The likelihood that they would have to compromise with Democrats to replace the sequester has led to a growing inclination among Republicans to simply pocket the savings and move on to other battles.
House Budget Committee Chairman Paul Ryan (R-Wis.) has predicted that the sequester will hit on schedule, making it easier for conservatives to approve a plan later in March to prevent a government shutdown. Tuesday, a parade of conservative lawmakers took to the House floor to argue for that outcome.
They know this will hurt the economy -- the CBO just explained it to them -- but they don't care.
Incidentally, President Obama wants a delay that would prevent the policy that would undermine the recovery, and in an interesting twist, a couple of congressional Republicans -- neither of whom is especially moderate -- endorsed the White House's idea yesterday.
Since intra-party GOP divisions are often a sign of future progress, this is an angle worth watching.
One more thing to keep an eye on. When pressed, House Speaker John Boehner (R-Ohio) will say his caucus has already replaced the automatic sequestration cuts with a credible alternative, so this isn't his problem anymore. He's wrong -- not only were the replacement cuts ridiculous, they were also from the last Congress, which means they're no longer applicable.
Maybe the House could try passing the same sequester replacement again? Actually, no.
House Republicans have no plans to vote again this month on their bill to replace automatic spending cuts scheduled to be implemented in just over three weeks.
The House-passed sequester replacement measure expired with the start of the new Congress, and GOP leaders would appear to face a tougher lift in passing the measure this time around.
The House barely passed the bill -- 215 to 209 -- in December, with 21 Republicans opposing the measure and no Democrats supporting it.
Five of the Republicans who voted "no" are no longer in Congress, but the GOP also has a smaller majority after losing a net of eight seats to Democrats in November's election.
As a result, if Democrats rally against the bill, there's a chance Republicans would not be able to muster the 217 votes needed to secure passage. Such an outcome would be embarrassing after Republican leaders were forced to pull a tax bill from the floor in December because of a lack of support.
Boehner boasted yesterday, "Republicans have twice voted to replace these arbitrary cuts with common-sense cuts and reforms that protect our national defense." But since bills from the last Congress are no longer viable in the new Congress, the Speaker's claim is nonsensical.
If the current crop of House Republicans want to replace arbitrary cuts with common-sense cuts and reforms that protect our national defense, they'll have to bring a bill to the floor and vote on it. What do you say, Mr. Speaker? Ready to put your bill where your mouth is?
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This is just more posturing, by a guy who is not even allowed to negotiate for his own caucus. Just like last time, he uses Cole as the pointman, to leave a marker. No way in heck does the McCain/Graham type of Republican vote to cut the military,in any way. Stay tuned, this could get messy...
I think it depends on if they can coral the real crack pot crypto-anarchists in the tea party...remember these are the people who are all for a government shutdown and think the "Establishment" is out to get them.
Oh please, what dramatics. The sequester is some $120 billion/yr, yes? Democrats got $60 billion/yr in new taxes, yes?
So all this rending of garments is over $60 billion? Really? We just spent that much for Sandy relief, without all these histrionics. The party of free stuff is also the party of drama queens.
Annie Oakley: I have ignored you for days, you are a swizzle stick, willfully stirring the pot. This particular post is not even to the level of drivel. Your heros on the right could not agree on what pair of socks to wear, and you want to imply that the reality-based people are into drama? Ever hear Boehner The Crier talk? Pick up your game Annie, I at least expect posts that rise to drivel-level...
The Party of Scott Farkus speaks.
"What's a little across the board eight percent cut to every single non-defense discretionary program? Who needs lighthouses and navigational aids, flood control, meat and fish inspections, federal criminal investigations, nuclear power plant inspection, customs inspections, drug interdiction, weather forecasting, forest fire containment, disaster relief, air traffic control, marine search and rescue, and mine safety inspections? What possible economic harm can come from slowing down the pace of environmental permitting that thousands of businesses require as a condition of operation? What difference does it make cares if every business in every town adjacent to a military base suffers yet another drop in sales as base employees cut back?
Who cares if we have to slow delivery of food, fuel and ammunition to soldiers on the battle field? And tell me, just what did those freeloading whiners do to justify free medical care, anyway? Bunch of parasites leaching off the productive classes, that's what they are.
And boy, don't get me started about the unemployed. All those 55 year olds who lost their job in the recession and no one ever wants to hire again because they only have ten years of working life left need to do is borrow some money from their parents and start a business of their own."
Long term deficit, short term unemployment.
Create jobs ("infrastructure"), they pay taxes, deficit declines.
Mu work is done here.
GOP priorities - party before the people.
This comment is primarily for PA residents. Our T-Party Governor, Tom Corbett, has just turned down the Affordable Care Act to Expand Medicaid even though the government pays 100% of it for the next three years and 90% after that. It leaves uninsured, low wage earners to go to the ER for treatment. This falls on the taxpayers of the commonwealth of Pennsylvania. Please make known to the Governor how you feel about this immoral and impractical decision:
In Harrisburg, his office: 717-787-2500
Rep. Daley (D)PA 724-938-6800 or 724-379-5540.
Thanks
Actually India - that comment applies to all of the GOTP.
Here is what my Senator, Pat Toomey, wrote to me today:
In other words, it presents hostage type situtation. He also states:
If this is true, then how has the economy grown in the past 4 years with such deficits in place? Don't the facts trump this theory? I guess as a Wall-Streeter, Toomey knows better.
#4jhamje
Toomey is also my Senator, please see the above comment on Gov. Corbett's most recent decision. Thanks. We need to protest this. We need to vote this governor our of this state.
Republicans can't be coherent because they can't come out and say, "I'm from the corporation and I'm here to eff you." A pretzel can't draw a straight line.
I think the GOP DOES care very much-- they care about crashing the economy during an Obama administration. That is the goal. That is the end result they are pursuing. They will stop at nothing left.
If they were the party in the executive office, they would be stimulating the hell out of the economy right now, and they ALL know it.
Right; they're destroyers posturing as builders.
While Republicans would love to tank the economy, their campaign contributors have a different mindset. You can be sure that Republicans are going to fold under pressure from Wall Street, the banks, defense industries, etc., because they stand to lose a lot of money if the sequester happens. The Republicans have folded twice without getting what they wanted from Obama. If they fold again, then their hostage taking will become meaningless and they will be perceived as paper tigers.
Republicans are trying another Wizard of Oz trick. Just listen to what we say but whatever you do do'nt look behind the curtain. The last election President Obama pulled the curtain back and gave the public a peek at what was really going on. They decided they did'nt like it. Now the "wizards" are at it again. Will it work for them this time? Not if the President can expose them again.
One very small quibble-- the spending cuts didn't take take capital out of the system, they took circulating money out of the system. What anyone spends is someone else's income, and from that point of view it really doesn't matter whether it's spent on paper clips or food or capital goods.
Here's a conversation no one has ever told me about-- you go to the checkout counter at a store. The clerk looks at you and says, "Hey, you're a teacher/cop/bureaucrat. You work for the government. Government spending isn't real money, so you're trying to steal from me. You put that stuff back on the shelf." I'm willing to bet big bucks that you wouldn't hear that line even in the reddest, most second-amendment-zealot tea-party gun shop.
When people report hearing that, that's when I'll believe the goopers have it right. But I think I'm going to have a long wait.
"It's a concept Republicans just can't wrap their heads around."
That is because they have their heads up their rectums all the time.
I'm willing to accept some short term cut in economic growth if it means we rein in defense spending. It will be a boost in the medium to long term.
That all depends on where the cuts are. You can bet the farm it ain't gonna be in shiny new military hardware (even those items the military doesn't even want). The troops will get the brunt of the cuts along with R&D in non-weapon development.
At some point, they need to get rid of some of the programs for the shiny new hardware, because the crap they are buying now not only doesn't work, it is the laughingstock of everyone, including our allies who considered buying some of it at one time. The only reliable fighters left in the USAF inventory are F-15s and F-16s, which are old designs that have been constantly upgraded, old airframes that are reaching the ends of their lives. Their replacements, the F-22 and F-35, are so expensive that the numbers to be purchased have had to be cut. The F-22 is best at trying to kill its own pilot, and is limited to flying near its airbase, to give time for the pilot to land before the plane suffocates him. They still haven't got a clue as to why the life support system does everything but support life. The F-35 is a trainwreck of a program that has wasted over $369 billion over the past decade, and still has so many flaws that no one knows when it will actually be able to be operational. The Navy has its own problem with the LCS, the Littoral Combat Ship, which has numerous performance issues, (i.e., leaks like a sieve), and according to many naval experts, will be unable to survive in any actual combat situation. So sure, let's cut some of these turkeys, punish defense contractors who do such a shoddy job of design and construction but still get paid billions, and work on a procurement system that makes sense.
Eventually we do have a problem. That the population is getting older, health care costs are rising…there is this question of how we’re going to pay for the programs. The year 2025, the year 2030, something is going to have to give…. …. We’re going to need more revenue…Surely it will require some sort of middle class taxes as well.. We won’t be able to pay for the kind of government the society will want without some increase in taxes… on the middle class, maybe a value added tax…And we’re also going to have to make decisions about health care, doc pay for health care that has no demonstrated medical benefits . So the snarky version…which I shouldn’t even say because it will get me in trouble is death panels and sales taxes is how we do this.
Why not simply follow the British model, where doctors are paid a salary instead of per procedure? Sound radical, even communistic? That's how the Mayo Clinic operates, and they have the best doctors and provide top quality care that draws in patients from around the world. When I have to pay $200 just to see a doctor, something is wrong. Until we fix this central issue in healthcare, costs will continue to rise.
This seems to be the logic on the right: If we're unable to force our views on the country, we have to destroy it, mount the rubble with our assault weapons and restore our rule over everyone with skin darker than ours.
A modern world in which their power is limited is not one they want to inhabit. That's why they're perfectly willing to blow it up.
I can't agree with the premise. The sequester is ultimately a very good thing; we'll never get such big military cuts without it, and we need even more military cuts still.
Will it hurt the economy a little? Yes - but if we refuse to cut the growth of military spending under that rationale, then we are inevitably arming the next neocon President, whenever that happens again, with the tools and momentum to invade and occupy more countries.
Let's be absolutely realistic about that.
I agree 100%. Yes, there are things we need to do on the healthcare front, as I outlined above. Doctors earning a salary rather than being paid per procedure is a great start. I don't get paid for each individual piece of work I do; even corporate CEOs get an annual salary. If we really wanted to take the bull by the horns, we'd turn back the clock and require that all insurance companies be non-profits. The defense industry needs to look at historical precedent: when wars ended, companies that built weapons retooled and got into the civilian market. Those who couldn't do so successfully failed, which is as it should be under the free market. If Lockheed Martin can't survive without making trash with wings like the F-35, they don't deserve to be in business. Maybe they could try to break the duopoly of Boeing and Airbus in the commercial aircraft business, a business they exited after the L-1011, which was a pretty good plane. There are plenty of niches to fill if they are willing to get off their fat, entitled butts and get creative. Aren't we always touting the entrepreneurial spirit here in America? Are defense contractors too fat, lazy and ossified to display that spirit?