Deficit-deluded tea party Republicans love the sequester scheme
The delusions of tea party Republicans are about to create a lot of misery for America. The “sequester” — the drastic set of budget cuts formerly known as the “fiscal cliff” — seems very likely to go into effect at the end of this week due in no small part to the fact that hyper-conservative lawmakers, such as Kentucky Sen. Rand Paul, actually think it’s a pretty swell idea.
Their obsessive and mistaken belief that the federal deficit is the greatest threat to the republic is leading them to block any compromise with Democrats that would delay or repeal the looming budget reductions.
They want government to get smaller and smaller, even if the cuts will come too quickly and slash too indiscriminately. The supreme absurdity of their position is that this could so damage the American economy that federal revenue will drop and deficit reduction will become even harder to achieve.
The tea party folks may be sincere, loyal citizens, but their notions about how the economy works are exactly that: mere notions. Their core notion is that government needs to do nothing more than get out of the way of business in order for the economy to boom and bloom.
In an 18th century world or in the fiction of Ayn Rand that might have worked, but the reality is different. The United States became the world’s biggest economy in the post-World War II years for many reasons, but one big reason is that government played a pivotal role.
Government built infrastructure like the interstate highway system, paid for crucial research and development, ran the space program, supported a massive military and played referee in the financial realm so that those who wanted to rig the system could not do it as easily as they had in the 1920s.
When, in his first inaugural address, Ronald Reagan famously said government is the problem, not the solution, he established the Republican mantra that has not changed in all the years since. It was a clever bit of rhetoric, but it has turned too many Republicans into economic simpletons. Government can, indeed, be part of the problem sometimes, but it cannot be left out of any solution to the challenges of our complex modern economy.
Pete Peterson, President Nixon’s secretary of Commerce, has campaigned for years against rising deficits and has earned the ire of liberals who think his insistence on restructuring Social Security and Medicare is too extreme and unnecessary. Yet, even Peterson, in an interview on public radio’s “Marketplace” on Tuesday, said many of his fellow Republicans are crazy to think the sequester cuts are a smart idea.
Peterson said the deficit problem is long-term and must be dealt with comprehensively through spending reductions, entitlement reforms and revenue increases, a.k.a. taxes.
What should not happen, Peterson insisted, is a governmental retreat from investing in America’s economic future through funding of things such as education, infrastructure and basic scientific research. Of course, to the tea party Republicans, such talk is heresy.
There is one other fallacy that anti-government conservatives cling to, and they talk about it so much that they have convinced most of the people in the country it is true. That fallacious premise is that President Obama has done nothing to reduce the federal deficit. In fact, the deficit has shrunk as a percentage of GDP every year since Obama took office. Check the numbers. Look it up. We are actually on the right track!
But that will not last long if hundreds of thousands of government workers are furloughed, if military bases are closed, if the air traffic control system is disrupted or if many other important government services are crippled. That will start happening on Friday when the sequester kicks in. If it does, we will have a bunch of deluded deficit hawks to thank for it.
(Thanks to the Los Angeles Times for this article)
President Obama’s Remarks In Newport News Today
Hello, Newport News! (Applause.) Well, it is good to see all of you here today.
I want to thank your CEO, Mike Petters, for showing me around. I usually don’t get a chance to hang out with nuclear submarines, especially submarines that my wife has sponsored. (Applause.) So right there, that was worth the trip.
But most importantly, it’s a great chance to see the incredible men and women who, every single day, are helping to keep America safe and are just the bedrock of this country’s manufacturing base. Thank you to all of you. (Applause.)
I want to thank our outstanding Secretary of the Navy, Ray Mabus, who’s here. (Applause.) There he is right there — the good-looking guy over at the end. (Laughter.) I want to thank your Mayor, McKinley Price, who served this nation bravely in the U.S. Army. (Applause.) I want to thank two outstanding Congressmen who care about this facility, care about Virginia and care about the country — Congressman Bobby Scott is here — (applause) — and Congressman Scott Rigell is here as well. (Applause.)
Now, the reason I came here today, in addition to seeing just some incredible stuff — it’s true, every time I come to these places, I don’t know how you all do it. It is just amazing work. But the main reason I’m here is to call attention to the important work that you’re doing on behalf of the nation’s defense, and to let the American people know that this work, along with hundreds of thousands of jobs, are currently in jeopardy because of politics in Washington.
In a few days, Congress might allow a series of immediate, painful, arbitrary budget cuts to take place — known in Washington as the sequester. Now, that’s a pretty bad name — sequester. But the effects are even worse than the name. Instead of cutting out the government spending we don’t need — wasteful programs that don’t work, special interest tax loopholes and tax breaks — what the sequester does is it uses a meat cleaver approach to gut critical investments in things like education and national security and lifesaving medical research. And the impact of this policy won’t be felt overnight, but it will be real. The sequester will weaken America’s economic recovery. It will weaken our military readiness. And it will weaken the basic services that the American people depend on every single day.
Already, the uncertainty around these cuts is having an effect. Companies are starting to prepare for layoff notices. Families are preparing to cut back on expenses. And the longer these cuts are in place, the greater the damage.
So here at Newport News Shipbuilding, you guys have made an enormous investment, because we’ve said in order to maintain the finest Navy that the world has ever known we’ve got to make sure that there is an orderly process whereby we are continually upgrading our ships, building new ships, maintaining our ships properly. And these are some big ships. So it’s expensive, and it’s complicated. And you’ve got 5,000 suppliers all across the country, and you’ve got to have some certainty and some knowledge about how things are going to proceed over the long term for Mike and others to plan properly.
So you’re rightly concerned. Mike is properly concerned about the impact that these cuts will have on not just this company, but companies and small businesses from all 50 states that supply you with parts and equipment.
Mike was telling me that you guys have already made a billion dollars’ worth of capital investment. You’ve got half a billion dollars in training costs as you recruit and hire new people. Well, those aren’t commitments that you make lightly. You’ve got to have the capacity to plan and have some certainty in terms of what it is that we’re going to be doing. And you know that if Congress can’t get together and plan our nation’s finances for the long term, that over time some of your jobs and businesses could be at risk.
Over at the Norfolk Naval Station, the threat of these cuts has already forced the Navy to cancel the deployment, or delay the repair of certain aircraft carriers. One that’s currently being built might not get finished. Another carrier might not get started at all. And that hurts your bottom line. That hurts this community.
Because of these automatic cuts, about 90,000 Virginians who work for the Department of Defense would be forced to take unpaid leave from their jobs. So that’s money out of their pockets, money out of their paychecks. And then that means there’s going to be a ripple effect on thousands of other jobs and businesses and services throughout the Commonwealth, because if they don’t have money in their pockets or less money in their pockets, that means they’re less able to afford to buy goods and services from other businesses. So it’s not just restricted to the defense industry.
All told, the sequester could cost tens of thousands of jobs right here in Virginia. But it doesn’t just stop there. If the sequester goes into effect, more than 2,000 college students would lose their financial aid. Early education like Head Start and Early Start would be eliminated for nearly 1,000 children, and around 18,000 fewer Virginians would get the skills and training they need to find a job.
Across the country, these cuts will force federal prosecutors to close cases and potentially let criminals go. Air traffic controllers and airport security will see cutbacks, and that could cause delays at airports across the country. Tens of thousands of parents will have to scramble to find child care for their kids. Hundreds of thousands of Americans will lose access to primary care and preventive care like flu vaccinations and cancer screenings, including more than 3,500 children right here in Virginia.
So these cuts are wrong. They’re not smart. They’re not fair. They’re a self-inflicted wound that doesn’t have to happen.
Now, the reason that we’re even thinking about the sequester is because people are rightly concerned about the deficit and the debt. But there is a sensible way of doing things and there is a dumb way of doing things. I mean, think about your own family. Let’s say that suddenly you’ve got a little less money coming in. Are you going to say, well, we’ll cut out college tuition for the kid, we’ll stop feeding the little guy over here, we won’t pay our car note even though that means we can’t get to work — that’s not what you do, right?
You step back and you say, what is it that’s important — our child’s education, making sure they’re healthy, making sure we can get to the job, keeping our house repaired? And then you say, here are the things that aren’t so important and you cut those out. You prioritize, and you make smart decisions. Well, we should be doing the same thing.
Now, I’ve laid out a plan that details how we can pay down our deficit in a way that’s balanced and responsible. We have the plan right on a website, the White House website. Everybody can go see it. It details exactly how we can cut programs that don’t work, how we can raise money by closing loopholes that are only serving a few, as opposed to the average American.
We detailed $930 billion in sensible spending cuts that we’re willing to make and $580 billion in wasteful tax loopholes and deductions that we’re willing to eliminate through tax reform.
And what I’ve said is if the Republicans in Congress don’t like every detail of my proposal, which I don’t expect them to, I’ve told them my door is open. I am more than willing to negotiate. I want to compromise. There’s no reason why we can’t come together and find a sensible way to reduce the deficit over the long term without affecting vital services, without hurting families, without impacting outstanding facilities like this one and our national defense. There’s a way of doing this.
And the fact is there are leaders in both parties throughout this country who want to do the same. I’ve got to give Scott Rigell credit. He is one of your Republican congressmen who’s with us here today — and that’s not always healthy for a Republican, being with me. But the reason he’s doing it is because he knows it’s important to you. And he’s asked his colleagues in the House to consider closing tax loopholes instead of letting these automatic cuts go through. He’s concerned about the deficit, and he’s more than prepared to make some really tough cuts, but he wants to do it in a smart way.
Bobby Scott — same thing. Some of the cuts we’ve proposed, Bobby might not think are perfect, but he knows that we’ve got to make some tough decisions. He just wants to make sure that you aren’t the ones who are adversely impacted and that we’re sharing the sacrifice in bringing down our deficit; we’re not just dumping it on a few people and we’re not doing it in a dumb way.
Senators like John McCain have made similar statements to what Scott said. Your Republican Governor along with other governors around the country have said they want Congress to stop the sequester, to stop these cuts.
But I just have to be honest with you. There are too many Republicans in Congress right now who refuse to compromise even an inch when it comes to closing tax loopholes and special interest tax breaks. And that’s what’s holding things up right now.
Keep in mind, nobody is asking them to raise income tax rates. All we’re asking is to consider closing tax loopholes and deductions that the Speaker of the House, John Boehner, said he was willing to do just a few months ago. He said there were a bunch of loopholes and deductions you could close. He said you could raise $800 billion, a trillion dollars by closing loopholes.
Well, we’re not even asking for that much. All we’re asking is that they close loopholes for the well-off and the well-connected — for hedge fund managers, or oil companies, or corporate jet owners who are all doing very well and don’t need these tax loopholes — so we can avoid laying off workers, or kicking kids off Head Start, or reducing financial aid for college students.
I don’t think that’s too much to ask. I do not think that is partisan. (Applause.) The majority of the American people agree with me. The majority of Newport News agrees with me. We need to get this done. (Applause.)
But the choice is up to Congress. Only Congress has the power to pass a law that stops these damaging cuts and replaces them with smart savings and tax reform. And the second I get that bill on my desk, I will sign it into law. But I’ve got to get Congress to pass it.
None of us will get 100 percent of what we want. Democrats, they’ve got to make some tough choices too. Democrats like me, we’ve said we’re prepared to make some tough cuts and reforms, including to programs like Medicare. But if we’re willing to compromise, then Republicans in the House have to compromise as well. That’s what democracy is about. That’s what this country needs right now. (Applause.)
So let me just make one last point, by the way, for those of you who are following this. Now, lately, some people have been saying, well, maybe we’ll just give the President some flexibility. He could make the cuts the way he wants and that way it won’t be as damaging. The problem is when you’re cutting $85 billion in seven months, which represents over a 10-percent cut in the defense budget in seven months, there’s no smart way to do that. There’s no smart way to do that. You don’t want to have to choose between, let’s see, do I close funding for the disabled kid, or the poor kid? Do I close this Navy shipyard or some other one? When you’re doing things in a way that’s not smart, you can’t gloss over the pain and the impact it’s going to have on the economy.
And the broader point is, Virginia, we can’t just cut our way to prosperity. We can’t just cut our way to prosperity. We can’t ask seniors and working families like yours to shoulder the entire burden of deficit reduction while asking nothing more from the wealthiest and the most powerful. We’re not going to grow the middle class just by shifting the cost of health care or college onto families that are already struggling, or forcing communities to lay off more teachers or cops or firefighters or shipbuilders, and then folks who are doing really well don’t have to do anything more. That’s not fair, and it’s not good for the economy.
And the other thing we’ve got to do is to stop having these crises manufactured every month. It seems like — I know you guys must get tired of it. (Applause.) Didn’t we just solve this thing? Now we’ve got another thing coming up? (Applause.) I mean, think about if Mike Petters ran his business this way — once every month or two there would be some crisis, and you wouldn’t be sure whether or not you were working or not. Even if it got solved eventually or ultimately, it would be pretty discouraging on people. You would be less productive. Ships wouldn’t get built as fast. You would waste money because you don’t know exactly what to expect. Folks aren’t sure, am I showing up to work today, or not?
If it’s not a good way to run a business, it’s sure not a good way to run a country. (Applause.)
Now, all of you, the American people, you’ve worked too hard for too long rebuilding and digging our way out of the financial crisis back in 2007 and 2008 just to see Congress cause another one. The greatest nation on Earth can’t keep on conducting its business drifting from one crisis to the next.
We’ve got to have a plan. We’ve got to invest in our common future. Our true north is a growing economy that creates good middle-class jobs; a country that provides its people with the skills they need to get those jobs and make sure that you’re getting paid a decent wage for working hard so you can support your families. That’s what we should be focused on right now. Not weakening the economy. Not laying people off. (Applause.) That’s what we should be talking about in Washington. And if you agree with me, I need you to make sure your voices are heard. Let your leaders know what you expect of them. Let them know what you believe. Let them know that what this country was built on was a sense of obligation to not just each other but to future generations; that we’ve got to shoulder those obligations as one nation, and as one people.
I was in a conversation with some of the governors from across the country yesterday and I told them, I said, I’ve run my last election. Michelle is very happy about that. (Laughter.) I’m not interested in spin; I’m not interested in playing a blame game. At this point, all I’m interested in is just solving problems. (Applause.) All I’m interested in is making sure that when you get up early in the morning, and get to this ship at 5:30 in the morning, that you know if you do a good job and if you work hard and if you’re making sure that all the parts to this incredible ship that you’re building are where they need to be — if you’re doing what you do, then you can go home feeling satisfied, I did my job, I did my part, I can support my family, I can take pride in what I’ve done for this country.
That’s all I want. I want us to be able to look back five years from now, 10 years from now, and say we took care of our business and we put an end to some of these games that maybe, I guess, are entertaining for some but are hurting too many people. But in order for us to make that happen I’m going to need you. The one thing about being President is, after four years you get pretty humble. (Laughter.) You’d think maybe you wouldn’t, but actually you become more humble. You realize what you don’t know. You realize all the mistakes you’ve made. But you also realize you can’t do things by yourself. That’s not how our system works. You’ve got to have the help and the goodwill of Congress, and what that means is you’ve got to make sure that constituents of members of Congress are putting some pressure on them, making sure they’re doing the right thing, putting an end to some of these political games.
So I need you, Virginia, to keep up the pressure. I need you to keep up the effort. I need you to keep up the fight. (Applause.) If you do, Congress will listen. If you stand up and speak out, Congress will listen. And together, we will unleash our true potential, and we’ll remind the world just why it is the United States builds the greatest ships on Earth and is the greatest nation on Earth. (Applause.)
Thank you. God bless you. God bless the United States of America. (Applause.)
If you were paying attention to the President’s speech you might have noticed that he mentioned tax loopholes ten times. He did that to emphasize that the Republicans are selling out the majority of Americans in order to protect tax loopholes for the rich. The Republicans are, and always have been, in the pocket of the rich. Checkout the graphic below if you want a visual representation of why closing tax loopholes for the rich makes sense and is fair.
Thanks to http://www.prosebeforehos.com for this graphic.
President Obama and his allies predict dire consequences, for the economy and for a wide array of government services. On Sunday, they released a report detailing how the cuts would play out in particular states. Kids in Georgia wouldn’t get their vaccines, defense contractors in Texas would lose work, teachers in Ohio would end up on furlough—the list goes on. Republicans and their allies have answered by suggesting the administration is exaggerating. “Over the next ten years, the sequester amounts to a $1.16 trillion cut, or roughly 3 cents on every federal dollar,” National Review editor Rich Lowry wrote on Friday. “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.”
Sorry, but squeezing a couple of pennies out of every dollar in the next year is a terrible idea. In absolute terms, government spending is significantly higher than it was a decade ago. But that’s largely a product of two factors. One is health care, the cost of which the government shoulders mostly through Medicare and Medicaid. The other is a temporary burst of spending from the Recovery Act, which was designed to stop the economy from collapsing in 2009. That spending is mostly finished anyway. And the sequester cuts woudln’t meaningfully reduce health care spending, though they would cut Medicare reimbursements. They would primarily affect “discretionary” spending, which includes everything from workplace safety inspections to defense spending to Head Start. As the graph here shows, discretionary spending—measured as a percentage of gross domestic product—is already lower than it was when Obama took office. The sequester cuts would reduce it further. At those historically low levels, severe cuts to government services are virtually inevitable, whether or not they are precisely the ones that the administration is predicting.
The effect on the economy could be equally blunt. The recovery is already pretty weak. Taking money out of it, which is what the sequester cuts would do, would make it weaker. Non-partisan analysts, including those at the Congressional Budget Office and private firms like Macroeconomic Advisers, predict that the sequester cuts would reduce growth by anywhere from a half to a full percentage point in the next year. That would probably reduce the number of jobs in the economy by a few hundred thousand. The unemployment rate, which has been slowly dropping, would probably remain at around 8 percent. By the way, it’s entirely possible the economy is already suffering because of the sequester cuts: Many analysts believe that decline in defense spending, in anticipation of the automatic cuts, are the reason the economy unexpectedly (and distressingly) shrunk in the final quarter of 2012.
To be fair, even conservatives don’t think the sequestration is a smart way to pare the budget. “It’s a terrible way to cut spending,” Senator Tom Coburn, Republican of Oklahoma, said on Fox News Sunday. But he and his allies obviously think the sequester cuts are preferable to Obama’s alternative, which would replace the sequester cuts with a mix of spending cuts (spread more carefully across discretionary spending and entitlements, including health care) and tax increases (via tax reform that closes loopholes benefiting the wealthy). In much the same way, Obama and the Democrats hate the sequester cuts less than they hate the Republican alternative, which would significantly reduce spending on programs for low-income people in order to protect the defense budget.
On balance, the public’s preferences are probably closer to Obama’s. That’s why Republicans are arguing the sequester cuts won’t hurt so much. Of course, within a week or two, political rhetoric may matter a lot less than longer lines at airport security, smaller unemployment checks, and other reminders that less government spending also means fewer government services.
(Thanks to Huffington Post for the Headline and article!)
Republicans keep pushing….pay no attention to the waterfall………..