Sequester is working

When President Obama proposed the sequester, he never thought it would happen. It was supposed to be so painful that everyone would compromise to avoid it; they didn’t. Obama predicted dire consequences to come; they didn’t. Now we see that the deficit is dropping faster than anybody predicted. Maybe sequester was not such a bad idea.

It is becoming clear that the sequester formed a kind of wall that stopped the further expansion of spending. It was illogical and seemed ill advised but maybe necessary.

When you are trying to do something that is good in the long run but painful in the short one, you sometimes need to do things that seem irrational. The person trying to lose weight might start with a diet that is unsustainable in the long run. This is designed to make a clean break with the mistakes of the past. When people want to save money, sometimes they will start by doing things like cutting back too far.

The advantage of slashing is that it changes the equation and the burden of proof. Instead of having to justify the cut, you have to justify the spending. One of the great fears of government officials is that they will cut a "vital" program and nobody will really notice or care. This seems to have happened in more cases than expected.

I think it is probably a good idea for almost all spending to have a "sunset." That means we don't put it on autopilot. At some point, we have to take an affirmative move to continue. It is much easier to not renew than it is to cut. Marketers know this. That is why they always try to get you to subscribe. You will often allow something to continue when it is in place, but you would not "buy" it again if you had to make a choice.

Sequester is unsustainable in the long run. In order to fix the problems politicians will have to make choices and tradeoffs. If they want more of something, they will have to cut something else, more or less like ordinary people and firms have to do.

It looks like sequester was an unexpected success. In the short run, it stopped the trend for just spending more. In the long run, it may help restore some fiscal discipline. Whether you think we should spend more or spend less, it is better if that decision is made explicitly and not just something that keeps rolling downhill.

Posted by Christine & John at August 13, 2013 2:21 AM
Comments
Comment #369420

And the fact that there are greater tax revenues from both tax increases and an improved economy has nothing to do with this, right?

Of course, the sequester will deprive us of some of that revenue, due to the harm it does to enforcement of our tax laws. I know Republicans love that crap, but if they thought for a second, it might occur to them that we don’t get revenue, Unless we pay people enough to collect the money To cut hundreds of millions, we are oddly willing to lose billions of dollars.

The truth is, the cuts are the main thing holding us back. The time to cut is when the economy isn’t needing to grow out of its current level of unemployment.

There are no Obama Doldrums, just Tea Party Doldrums. Everything he did was aimed towards increasing growth. The Tea Party? They’re more concerned about their agenda, which they figure will magically cause growth.

We’ve been trying to talk y’all out of this, but unfortunately, you insist on only seeing the spending side of this, and not even doing a cost benefit analysis. I remember actually seeing an article somewhere, which I’m still searching for, that says that all the savings from the sequester have essentially been swallowed up by the loss of revenue from the jobs lost or not recovered, and from the revenue not collected.

Of course, if you went out to your fellow Republicans with that message, you’d be drug out by your ears. Policy will always be more complicated than rhetoric or ideology, because unlike those two things, it has to deal with, it will deal with the real world, which doesn’t spare us disillusionment when we get our predictions wrong.

Posted by: Stephen Daugherty at August 13, 2013 2:31 PM
Comment #369423

http://www.huffingtonpost.com/2013/08/12/us-budget-deficit_n_3745096.html

“WASHINGTON — The government on Monday reported a $97.6 billion deficit for July but remains on track to post its lowest annual budget gap in five years.

July’s figure raises the deficit so far for the 2013 budget year to $607.4 billion, the government says. That’s 37.6 percent below the $973.8 billion deficit for the first 10 months of the 2012 budget year.

The Congressional Budget Office has forecast that the annual deficit will be $670 billion when the budget year ends Sept. 30, far below last year’s $1.09 trillion. It would mark the first year that the gap between spending and revenue has been below $1 trillion since 2008.

Steady economic growth, higher taxes, lower government spending and increased dividends from mortgage giants Fannie Mae and Freddie Mac have helped shrink the deficit.

Through July, the government collected $2.29 trillion in revenue, up 13.9 percent from the same 10 months last year. Government spending during this period totaled $2.89 trillion, down 2.9 percent from a year ago. That decline reflects, in part, automatic government spending cuts that began taking effect March 1.”

Sounds to me like the country is doing better despite Daugherty’s wailing and gnashing of teeth. A 2.9% reduction in government spending is considered catastrophic by the left proving once again that they believe power is retained by government spending.

Posted by: Royal Flush at August 13, 2013 3:15 PM
Comment #369424

Royal Flush-
If I had actually hired you to pass on my opinion, I would have fired you by now for incompetence.

You folks complain, because you haven’t had a month of negative job growth since early in Obama’s first term, about the Obama doldrums. But in reality, the strongest thing holding us back is still Republican policy. If we weren’t trying to prematurely solve our fiscal problems, our economic growth would actually be solving many of them for use.

My message is, “stop holding us back!”

Oh, if you want to prove the sequestration isn’t responsible, then let’s do some simple math: the decline is 2.9%, which runs about 86.13 billion. That is less than a third of the total decline, and that’s counting ALL spending declines, not just the sequestration cuts.

Additionally, as I noted, the slowdown caused by the sequestration has cost jobs, cost growth, so in real terms, it may not even be justified to count the sequestration as a plus in the equation.

So, it’s you who should be wailing and gnashing your teeth, because more than two thirds of the deficit reduction comes from things that could be reasonably credited to the Democrats: tax increases and economic stimulus.

Our plans are working. If only Republicans had the sense to get out of the way of success.

Posted by: Stephen Daugherty at August 13, 2013 3:37 PM
Comment #369425

Bloviation continues to be Doughboy’s long suite and he flatters himself by thinking I would ever, ever, work for him.

Posted by: Royal Flush at August 13, 2013 3:46 PM
Comment #369426

Buried in Doughboy’s link to “The Hill”, which he conveniently didn’t include, is the following quote directly from the CBO report.

“Although output would be greater and employment higher in the next few years if the spending reductions under current law were reversed, that policy would lead to greater federal debt, which would eventually reduce the nation’s output and income below what would occur under current law. Moreover, boosting debt above the amounts projected under current law would diminish policymakers’ ability to use tax and spending policies to respond to unexpected future challenges and would increase the risk of a fiscal crisis (in which the government would lose the ability to borrow money at affordable interest rates).”

Posted by: Royal Flush at August 13, 2013 4:03 PM
Comment #369431

Royal Flush-
Well, you seem to have taken on the job, whether or not you’d ever willingly put yourself in my employ. I constantly here from you all the things that I supposedly think, despite the fact that I constantly maintain an up-to-date record of my own positions.

They’re always these really nutso strawman arguments which you then proceed to just proclaim to be insane, nuts, or whatever.

As far as “eventual reductions” go?

Look, we’re experiencing very CURRENT reductions in our ability to shape both spending and revenue. Without people working, without growth at high enough rate, we run the risk of undermining recovery, even reversing it, which would send us into a fiscally destructive recession once again. We also can’t spend less on unemployment or other things without creating all the effects you just so love to point out every time the unemployment rate goes down, whether they’re true or not.

You don’t see this as a system with feedbacks. You only see cuts, no taxes, and that’s the way the budget is reconciled. Unfortunately, it’s not that simple, and the economy depends in part on federal spending, which you’ve reduced.

The effects are measurable! And if the economy’s not growing, neither are the revenues.

Besides, did you ask the critical question: how would gains from repeal of sequestration (which wasn’t even supposed to be actual policy anyways) stack up against the later undermining of the economy?

Cost benefit analysis doesn’t work if you measure neither with any dependability.

Posted by: Stephen Daugherty at August 13, 2013 6:41 PM
Comment #369433

Good Lord Doughboy…I can’t believe how warped your mind is. You post a link to an article you stupidly believe supports your spendthrift policies and when I explore the CBO report behind the link, and quote from it, you become delusional.

Some folks writing here are half-assed…you, are half-facted. You are not even credible when using your own biased material…lol…and that takes some real effort.

However I do understand your psyche. You live in a magic filled world with dwarfs and elves. In this fantasy world, what one says is real. I suspect you wear your character costume while you write here. It seems to give you power, but not insight, truthfulness, or objectivity.

Posted by: Royal Flush at August 13, 2013 7:02 PM
Comment #369435

Stephen

The sequester was Obama’s proposal. During the election campaign, he assured us that it would never happen because he was willing to make compromises. I recall that he even talked about washing the Speaker’s car.

Obama was unable to find compromises so the sequester hit. It is not as bad as it was said to be and has had the useful effect of cutting spending.

I would prefer smarter spending, but our political leaders are unable to agree about them them. It looks like this is the best we can do.

Indeed, I wish Obama had shown the leadership he promised, but he is unable to do what he said he would.

We raised taxes at the beginning of the year. That is indeed responsible for some of the budget change. You say, “The time to cut is when the economy isn’t needing to grow out of its current level of unemployment.” Yet you want to raise taxes.

Royal and Stephen

Royal’s link provides insight into Obama think. This has been the story of his leadership. He takes benefits up front and defer the cost. This is what the stimulus did by moving economic activity from 2009 from later years (like now)

Since I hope to live more than the years remaining in the Obama presidency, I am more interested in taking harder choices now for better results later.

Posted by: CJ at August 13, 2013 7:16 PM
Comment #369438

Since I hope to live more than the years remaining in the Obama presidency, I am more interested in taking harder choices now for better results later.
Posted by: CJ at August 13, 2013 7:16 PM

That is adult talk C/J…putting off gratification until one has earned enough to pay for it. The left seems to cherish instant gratification regardless of the eventual price to be paid…by someone else in most cases.

The left wishes to live and die by the credit card. Adults simply try to live within their means.

If individual Americans abused their credit they way the federal government does we would all be bankrupt.

Posted by: Royal Flush at August 13, 2013 7:41 PM
Comment #369442

“If individual Americans abused their credit they way the federal government does we would all be bankrupt.”

They of course have. The two periods of exploding and extraordinary private sector household debt in the past hundred years were the years immediately preceding the Great Depression and Great Recession. They were the only two periods in the past century that the ratio of total private debt to GDP significantly exceeded 150% and which had dramatic increases in private debt in the years preceding (45% and 40%).
http://cdn.theatlantic.com/static/mt/assets/steve_clemons/How%20to%20Predict%20the%20Next%20Financial%20Crisis%5B1%5D-2.pdf

Posted by: Rich at August 13, 2013 8:59 PM
Comment #369450

I wonder why the MSM has had such much trouble explaining to the American people that Jesse Jackson Jr. was a Democrat Congressman?

Posted by: Political Hostage at August 15, 2013 3:58 PM
Comment #369452

C&J-
Your people wouldn’t accept any proposal that involved tax increases, even if they were matched by ten times that in spending cuts.

Now look at that. Democrats wouldn’t want any spending cuts at this point, but they were willing to make them. There was even a Chained CPI proposal, extraordinarily unpopular in our party. Nothing. Not one inch of give, for a full foot of compromise.

You can toss around rhetoric that says we didn’t compromise, but the truth is, your people wouldn’t even discuss it.

But that’s not even it. On a basic level, the only reason the sequester exists is the debt ceiling crisis. The only reason that exists? Your party has been taken over by it’s right wing, and they don’t want to wait until they have the senate to get their way on policy. So they risked the nation’s creditworthiness with an insane refusal to pay bills we already ran up.

And for the cuts you’d like to claim were necessary for the economy? Well, hell, there’s been plenty of evidence that growth has slowed on their count. You call it the Obama doldrums, but the truth is, we’ve had more years with your side extorting its spending cuts than years of Obama doing stimulus.

It’s the Tea Party Doldrums. They decided a weak economy would be a great time to try and fight inflation, and so by definition, they’ve countered weak growth and job recovery with job-killing, growth cooling measures.

It’s fortunate that Obama got to the economy first, because if your side had, we’d be in a deeper hole. Not only that, we’d be without one of our true growth industries, the domestic car-makers.

Political Hostage-
With a name like Jesse Jackson, Jr. don’t you think people can take a wild guess what his politics are?

As for the MSM having a hard time explaining to the American people that he was a Democratic (adjective form of the word) Party Congressman?

CNN:

Washington (CNN) — Former U.S. Rep. Jesse Jackson Jr., once a rising Democratic star whose political fortunes imploded over the use of campaign finances to support lavish personal spending, was sentenced to 30 months in prison on Wednesday.

NBC news/Reuters:

Jackson, a former Democratic representative and the son of civil rights leader the Rev. Jesse Jackson Sr., apologized before U.S. District Judge Amy Berman Jackson sentenced him on Wednesday.

ABC News:

Jackson, 48, had been a Democratic congressman from Illinois from 1995 until he resigned last November. In an emotional speech to the judge, he choked up and used tissues to blow his nose. He apologized and said he wanted to “take responsibility for my actions.”

Caption below CBS News Video:

After being sentenced to 30 months in prison for misusing campaign funds, former Rep. Jesse Jackson Jr., D-Ill., told reporters, “I erred,” saying he still believes in the power of redemption.

It’s a coverup of lilliputian proportions. They’re going all out to hide the fact in plain sight. You couldn’t not find evidence that he was a Democratic Party Congressman at any news outlet. ;-)

Posted by: Stephen Daugherty at August 15, 2013 5:10 PM
Comment #369454

Stephen

We had a tax increase at the start of the year. Democrats agreed to no spending cuts after that.

The sequester was a blunt instrument. I would prefer to have smarter cuts. Republicans would have given the president more discretion, but he didn’t want to take the responsibility.

President Obama proposed the sequester. He promised during the election that it would never happen. When it looked like it would happen, he threatened terrible consequences. Now that it has come and not been very bad, he is talking about things could be better.

Re Obama doldrums - this recovery has been horrible. Obama had his way 100% for two years. He expected his plans to work by 2010, the summer of recovery. It didn’t work out for him, or us. I am getting a little angry at him. I have a good job, but my kids are struggling.

The greatest real stimulus during the past few years has been the astonishing growth of American oil and gas production. This has added more than a million jobs and pumped in billions of dollars. Although these developments started before Obama and he resisted at first, if I were you guys I would claim it for Obama.

Posted by: CJ at August 15, 2013 8:34 PM
Comment #369455

So what. The deficit reduction is insignificant compared to the real problem which is lack of consumer spending. Corporations are sitting on record amounts of cash. No sense investing in capital improvements and increasing productive capacity when you have no customers who can purchase.

That’s where we are now and what will force the doldrum in GNP. As the middle class gets squeezed and more and more people are forced into the lower economic tiers, cutting services to those who have already paid into programs and cutting food and housing to poor children are all that is left.

The wealthy certainly are not expecting government to cut their corporate, realty, and agricultural subsidies. Children may grow hungry, but conservatives and, yes, liberal politicians and businessmen will continue to receive payments from the public coffers.

This is the Republican platform. This is also the reason the current conservative ideology will be no more in a decade. No matter. The conservative propaganda machine will push a false narrative which denies the current positions ever existed. They will blame it all on liberals… again.

Posted by: LibRick at August 15, 2013 10:01 PM
Comment #369460

C&J-
Don’t confuse the debt-ceiling negotiations with the Bush Tax Cut Renewal negotiations, especially given the fact that the default on the latter was NOBODY’s tax cut would be renewed.

Put another way, The failure to renew at least part of the Bush Tax Cut, which Republicans seemed prepared to do, just to avoid a tax increase for the rich, would have been greater austerity than if they had simply done nothing.

In the case of the debt ceiling negotiations, the default, if we went right ahead and renewed the debt ceiling, was no austerity. Obama went out of his way to keep the austerity off the average Consumer’s back. Republicans in Congress did otherwise.

You say Obama had his way 100% for two years. Yet you fully supported the obstruction that killed 80% of what came out of the House. You can’t argue both. You can’t celebrate what is by definition Obama not getting legislation to sign, much of which he probably wanted, and then say he got everything he wanted. They literally are mutually exclusive positions, and you should be more careful than to make such sloppy arguments.

The Sequester was not a policy that Obama would have forced on himself. It wasn’t even meant to be policy, it was meant to be something so stupid that Congress would get its act together and avoid it through compromise. But your side, after signing onto this agreement, then turned around and took any tax increases off the table. No politically damaging policy proposals for you! Just for us.

As far as stimulus goes?

You should remember that in 2008, gasoline prices took a nose-dive. Why? Because fracking suddenly produced so much oil?

No. Because all of a sudden, there was a hell of a lot less to trade, a hell of a lot fewer reasons to travel, a lot of people who couldn’t afford to take vacations, etc. Demand dropped considerably.

This is important for a couple reasons. First, it doesn’t matter how much oil you produce, if nobody wants it, nobody’s going to buy it, at least at lucrative rates. Second, this supply you talk about depends on expensive means of extraction. Fracking is certainly more complex and costly than simple drilling a hole and sticking a pipe down it. We’ve seen in the natural gas market that they’ve actually started to hold off on drilling projects, at least with dry natural gas (which has fewer hydrocarbons useful to chemical companies than “wet”), because the supply fracking has yielded has gone up so considerably.

Let’s remind ourselves of something else: the level of demand has gone down. Prices have returned to near what they were before. For some reason this isn’t a crisis. Why?

If the price is the same, and people are getting back to doing business, then how could demand not be rising as far accordingly?

Efficiency. Simply put, Obama’s increase of fuel efficiency standards, his restructuring of Detroit towards more efficient vehicles, and other moves have been more responsible for the lack of an energy crisis than anything else.

The two things that make it doubtful that the energy sector’s leading the advance are a) The price for gasoline is back where it started, and b) The energy sector’s hiring nowhere near as much as some of the top employers.

But hey, you want to take a boom and take credit for improving the economy on its account. Except, it’s significant, but not to the degree it would have to be to be the source of new growth.

We added millions of jobs and pumped in hundreds of billions of dollars, too, and the growth after we did so was considerably greater.

Plus, lets stop a second here: whatever happens, this is an energy boom, and take it from a Texan, energy booms end, and when they do, the jobs go away. We need to focus our economic stimulus on creating more sustainable work for people.

Posted by: Stephen Daugherty at August 16, 2013 4:30 PM
Comment #369464

Stephen

It is nice that you credit only Bush with the tax cut, but it became the Obama/Bush/Democratic tax cut when it was renewed by President Obama and a Democratically controlled Senate. No matter, the fact is that taxes went up in 2013 for all of us who work to earn money. There was a greater tax rise on the wealthiest Americans.

RE Obama and legislation - it is hard to trust him. He enforces or not laws as he wishes. If you make a deal with him, he may simply order his people to ignore the part he conceded.

Re fracking - this has added more money and more jobs to the U.S. economy than the stimulus of 2009. More importantly, these jobs are based on real stuff, not borrowed money.

Re natural gas - firms are not drilling as much because prices are so low and this is something that bothers you? These lower prices are stimulating the economy. If it was working better, we would notice a big difference. But had it not been for the increased supplies of American energy, the situation would have been a lot worse and Obama’s failure more evident.

Re efficiency - we reached “peak gasoline” in 2007, two years before Obama took office. Since that time demand for gasoline has been dropping. I know you think Obama can perform miracles, but even he cannot time travel, can he?

Re - take if from a Texan - you live there but it doesn’t give you any special energy insights. Everybody knows that energy is a cyclical business. Liberal simply want to end the cycle by making them all bad.

Posted by: CJ at August 16, 2013 5:26 PM
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