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Boehner Halts Talks on Cuts and House GOP Cheers
http://www.nytimes.com/2013/03/01/us...anted=all&_r=0
Ben Bernanke, Hippie
We're just a few weeks away from a milestone I suspect most of Washington would like to forget: the start of the Iraq war. What I remember from that time is the utter impenetrability of the elite prowar consensus. If you tried to point out that the Bush administration was obviously cooking up a bogus case for war, one that didn't bear even casual scrutiny; if you pointed out that the risks and likely costs of war were huge; well, you were dismissed as ignorant and irresponsible.
It didn't seem to matter what evidence critics of the rush to war presented: Anyone who opposed the war was, by definition, a foolish hippie. Remarkably, that judgment didn't change even after everything the war's critics predicted came true. Those who cheered on this disastrous venture continued to be regarded as "credible" on national security (why is John McCain still a fixture of the Sunday talk shows?), while those who opposed it remained suspect.
And, even more remarkably, a very similar story has played out over the past three years, this time about economic policy. Back then, all the important people decided that an unrelated war was an appropriate response to a terrorist attack; three years ago, they all decided that fiscal austerity was the appropriate response to an economic crisis caused by runaway bankers, with the supposedly imminent danger from budget deficits playing the role once played by Saddam's alleged weapons of mass destruction.
Now, as then, this consensus has seemed impenetrable to counterarguments, no matter how well grounded in evidence. And now, as then, leaders of the consensus continue to be regarded as credible even though they've been wrong about everything (why do people keep treating Alan Simpson as a wise man?),
while critics of the consensus are regarded as foolish hippies even though all their predictions - about interest rates, about inflation, about the dire effects of austerity - have come true.
So here's my question: Will it make any difference that Ben Bernanke has now joined the ranks of the hippies?
Earlier this week, Mr. Bernanke delivered testimony that should have made everyone in Washington sit up and take notice. True, it wasn't really a break with what he has said in the past or, for that matter, with what other Federal Reserve officials have been saying, but the Fed chairman spoke more clearly and forcefully on fiscal policy than ever before - and what he said, translated from Fedspeak into plain English, was that the Beltway obsession with deficits is a terrible mistake.
First of all, he pointed out that the budget picture just isn't very scary, even over the medium run: "The federal debt held by the public (including that held by the Federal Reserve) is projected to remain roughly 75 percent of G.D.P. through much of the current decade."
He then argued that given the state of the economy, we're currently spending too little, not too much: "A substantial portion of the recent progress in lowering the deficit has been concentrated in near-term budget changes, which, taken together, could create a significant headwind for the economic recovery."
Finally, he suggested that austerity in a depressed economy may well be self-defeating even in purely fiscal terms:
"Besides having adverse effects on jobs and incomes, a slower recovery would lead to less actual deficit reduction in the short run for any given set of fiscal actions."
So the deficit is not a clear and present danger, spending cuts in a depressed economy are a terrible idea and premature austerity doesn't make sense even in budgetary terms. Regular readers may find these propositions familiar, since they're pretty much what I and other progressive economists have been saying all along. But
we're irresponsible hippies. Is Ben Bernanke? (Well, he has a beard.)
The point is not that Mr. Bernanke is an unimpeachable source of wisdom; one hopes that the collapse of Alan Greenspan's reputation has put an end to the practice of deifying Fed chairmen. Mr. Bernanke is a fine economist, but no more so than, say, Columbia's Joseph Stiglitz, a Nobel laureate and legendary economic theorist whose vocal criticism of our deficit obsession has nonetheless been ignored. No, the point is that Mr. Bernanke's apostasy may help undermine the argument from authority - nobody who matters
disagrees! - that has made the elite obsession with deficits so hard to dislodge.
And an end to deficit obsession can't come a moment too soon. Right now Washington is focused on the idiocy of the sequester, but this is only the latest episode in an unprecedented run of declines in public employment and government purchases that have crippled our economy's recovery. A misguided elite consensus has led us into an economic quagmire, and it's time for us to get out.
http://mobile.nytimes.com/article?a=...&sub=Columnist
Boehner Halts Talks on Cuts and House GOP Cheers
http://www.nytimes.com/2013/03/01/us...anted=all&_r=0
Last edited by boutons_deux; 03-01-2013 at 11:36 AM.
The Sequester Explained
Where did the whole idea of sequestration originate?
It goes back to 1985. The tax cuts of Ronald's Reagan early years, combined with his aggressive defense buildup, produced a growing budget deficit that eventually prompted passage of the Gramm-Rudman-Hollings Act. GRH set out a series of ambitious deficit reduction targets, and to put teeth into them it specified that if the targets weren't met, money would automatically be "sequestered," or held back, by the Treasury Department from the agencies to which it was originally appropriated. The act was declared uncons utional in 1986, and a new version was passed in 1987.
Sequestration never really worked, though, and it was repealed in 1990 and replaced by a new budget deal. After that, it disappeared down the Washington, DC, memory hole for the next 20 years.
What about the 2013 version? Where did that come from?
In the summer of 2011, Republicans decided to hold the country hostage, insisting that they'd refuse to raise the debt ceiling unless President Obama agreed to substantial deficit reduction. After months of negotiations over a "grand bargain" finally broke down in July, Republicans proposed a plan that would (a) make some cuts immediately and (b) create a bipartisan committee to propose further cuts down the road. But they wanted some kind of automatic trigger in case the committee couldn't agree on those further cuts, so the White House hauled out sequestration from the dust heap of history as an enforcement mechanism. It would go into effect automatically if no deal was reached.
In the end, no immediate cuts were made, but a "supercommittee" was set up to propose $1.5 trillion in deficit reduction later in the year. To make sure everyone was motivated to make a deal, the sequester was designed to be brutal: a set of immediate, across-the-board cuts to both defense spending and domestic spending, starting on January 1, 2013. The idea was that everyone would hate this so much they'd be sure to agree on a subs ute.
Needless to say, no such agreement was reached. So now we're stuck with the automatic sequestration cuts.
How big is the sequester?
You'd think this would be an easy question to answer. In fact, it's surprisingly complicated! Are you ready?
The basic amount of the sequester is $1.2 trillion in deficit reduction over 10 years. But when you reduce spending, you also reduce interest on the national debt. This means that we only need $984 billion in actual program cuts. And since it's for ten years, naturally that means we divide by nine to get annual spending cuts of $109 billion. For FY2013, this comes to $12 billion per month, because there are only nine months from January (when the sequester begins) through the end of the fiscal year in September.
But wait! The fiscal cliff deal in January delayed the sequester until March 1, so it also lopped off two months of cuts. This means that the total amount of spending cuts for this year clocks in at $85 billion.
So what gets cut?
The sequester is split evenly between defense spending and domestic spending. The domestic half has two parts: Medicare and everything else. For Medicare, the sequester
at their usual rate, but they'll only receive 98 cents on the dollar. According to the Congressional Budget Office, here's how the whole thing nets out (see Table 1-2):
- Defense: $42.7 billion
- Medicare: $9.9 billion
- Other domestic: $32.7 billion
Aside from Medicare, how are the other cuts divvied up?
The sequester legislation requires the cuts to come evenly from every budget account. This means everything (with a few exceptions) gets cut the same amount. This is an especially stupid way to cut spending, since everyone agrees that some programs are more important than others, but that's the way it is. If you really want to torture yourself, you can read this OMB report, which contains 224 pages listing the sequester amounts from every single agency in the United States government. It's followed by another 158 mind-numbing pages of agency accounts that are exempt from the sequester.
But as stupid as this is, don't get too excited about it. It's only for FY2013, which lasts seven more months. After that, although the total amount stays in place ($109 billion, split evenly between defense and domestic spending), congressional appropriations committees have much more flexibility about how to juggle the cuts.
Aren't we still in a recession? What are these cuts going to do to the economy?
Technically, we're no longer in a recession, but there's no question the economy remains weak. A big bunch of dumb spending cuts is about the last thing we need.
That said, the actual impact of the cuts is hazy. Among private forecasting firms,Macroeconomic Advisers figures the sequester will cut GDP by 0.7 percentage points, while IHS Global Insight puts it at 0.3 percent. Back before the sequester was delayed, CBO estimated 0.8 percentage points. Given a consensus growth forecast of about 2 percent for this year, this is a fairly substantial headwind. In terms of jobs, it will probably increase the unemployment rate by about half a percentage point. This is why Fed chairman Ben Bernankebasically told Congress on Tuesday that they were nuts to let the sequester proceed.
That's all sort of bloodless. How about some horror stories? You know, three-hour waits at airports because of TSA cutbacks, food poisoning epidemics thanks to USDA cutbacks, that sort of thing?
The White House has been making a lot of hay over its 50-state breakdown of cutbacks. California, for example, will lose 1,200 teachers, 8,200 Head Start slots, 49,000 HIV tests, $5 million in meals for seniors, etc. You can see the forecasts for your state here. Aside from that, WonkBlog seems to be the go-to site for alarmist coverage of the sequester. Brad Plumer has the impact on R&D spending here. In an interview with Ezra Klein, former NIH director Elias Zerhouni says it will be a "disaster for research." Suzy Khimm interviews a former Homeland Security official here who says smuggling will increase. And MoJo's own Zaineb Mohammed lists six ways the sequester will hurt the environment here, including higher risk of damage from wildfires.
That's terrible! Does anyone have a plan to avoid the sequester?
Sure. Sort of. President Obama has proposed a subs ute that includes about $1.1 trillion in spending cuts and $700 billion in new revenue. It was dead on arrival because Republicans are flatly unwilling to consider any plan that includes higher taxes. Back in December, Republicans in the House passed a bill that would have kept all the domestic cuts and replaced the defense cuts with yet more domestic cuts, mostly to anti-poverty programs. It was DOA too, for obvious reasons. House and Senate Democrats have plans as well.
But the truth is that there's probably no deal to be made. Republicans won't accept tax hikes, Democrats won't accept any bill that's exclusively spending cuts, and neither party is willing to just kill the sequester outright, which is the most sensible option. For now, all that's really happening is that both sides are barnstorming the country blaming the other guys. Obama seems to be winning that battle at the moment.
http://www.motherjones.com/kevin-dru...ster-explained
The Sequester and the Tea Party Plot
Imagine a plot to undermine the government of the United States, to destroy much of its capacity to do the public's business, and to sow distrust among the population.
Imagine further that the plotters infiltrate Congress and state governments, reshape their districts to give them disproportionate influence in Washington, and use the media to spread big lies about the government.
Finally, imagine they not only paralyze the government but are on the verge of dismantling pieces of it.
Far-fetched? Perhaps.
But take a look at what's been happening in Washington and many state capitals since Tea Party fanatics gained effective control of the Republican Party, and you'd be forgiven if you see parallels.
Tea Party Republicans are crowing about the "sequestration" cuts beginning today (Friday). "This will be the first significant tea party victory in that we got what we set out to do in changing Washington," says Rep. Tim Huelskamp (Kan.), a Tea Partier who was first elected in 2010.
Sequestration is only the start.
What they set out to do was not simply change Washington but eviscerate the U.S. government -- "drown it in the bathtub," in the words of their guru Grover Norquist --
slashing Social Security and Medicare,
ending worker protections we've had since the 1930s,
eroding civil rights and voting rights,
terminating programs that have helped the poor for generations,
and making it impossible for the government to invest in our future.
Sequestration grew out of a strategy hatched soon after they took over the House in 2011, to achieve their goals by holding hostage the full faith and credit of the United States -- notwithstanding the Cons ution's instruction that the public debt of the United States "not be questioned."
To avoid default on the public debt, the White House and House Republicans agreed to harsh and arbitrary "sequestered" spending cuts if they couldn't come up with a more reasonable deal in the interim. But the Tea Partiers had no intention of agreeing to anything more reasonable. They knew the only way to dismember the federal government was through large spending cuts without tax increases.
Nor do they seem to mind the higher unemployment their strategy will almost certainly bring about. Sequestration combined with January's fiscal cliff deal is expected to slow economic growth by 1.5 percentage points this year - dangerous for an economy now crawling at about 2 percent. It will be even worse if the Tea Partiers refuse to extend the government's spending authority, which expires March 27.
A conspiracy theorist might think they welcome more joblessness because they want Americans to be even more fearful and angry. Tea Partiers use fear and anger in their war against the government -- blaming the anemic recovery on government deficits and the government's size, and selling a poisonous snake-oil of austerity economics and trickle-down economics as the remedy.
They likewise use the disruption and paralysis they've sown in Washington to persuade Americans government is necessarily dysfunctional, and politics inherently bad. Their continuing showdowns and standoffs are, in this sense, part of the plot.
What is the President's response? He still wants a so-called "grand bargain" of "balanced" spending cuts (including cuts in the projected growth of Social Security and Medicare) combined with tax increases on the wealthy. So far, though, he has agreed to a gross imbalance -- $1.5 trillion in cuts to Republicans' $600 billion in tax increases on the rich.
The President apparently believes Republicans are serious about deficit reduction, when in fact the Tea Partiers now running the GOP are serious only about dismembering the government.
And he seems to accept that the budget deficit is the largest economic problem facing the nation, when in reality the largest problem is continuing high unemployment (some 20 million Americans unemployed or under-employed), declining real wages, and widening inequality. Deficit reduction now or in the near-term will only make these worse.
Besides, the deficit is now down to about 5 percent of GDP -- where it was when Bill Clinton took office. It is projected to mushroom in later years mainly because healthcare costs are expected to rise faster than the economy is expected to grow, and the American population is aging. These trends have little or nothing to do with government programs. In fact, Medicare is far more efficient than private health insurance.
I suggest the President forget about a "grand bargain." In fact, he should stop talking about the budget deficit and start talking about jobs and wages, and widening inequality - as he did in the campaign. And he should give up all hope of making a deal with the Tea Partiers who now run the Republican Party.
Instead, the President should let the public see the Tea Partiers for who they are -- a small, radical minority intent on dismantling the government of the United States. As long as they are allowed to dictate the terms of public debate they will continue to hold the rest of us hostage to their extremism.
http://www.huffingtonpost.com/robert...comm_ref=false
Last edited by boutons_deux; 03-01-2013 at 11:48 AM.
A Graphic Guide to the Sequester
There's been a lot of talk of the looming budget cuts that, without a last-minute deal,must go into effect by 11:59 p.m. ET tomorrow night. Obama will meet with congressional leaders on Friday to discuss how to avoid the worst consequences of the sequester.
What is the sequester, and how big is it? Here's our quick graphic guide, from the budget terms you need to know, to how it could impact your home state.
http://thinkprogress.org/climate/201...idies-century/
Lol, thinkprogress. Lol, Krugman.
DarrinS, shooting blanks, as always.
Krugman, Stiglitz, etc have been right about economics in the past 10 years, so I'm betting their right on how the sequester will bring on austerity to USA, INCREASING the deficit due to lost tax revenue.
The sequester won't last. Here's why.
So the bottom line is this: For all the handwringing about the sequester, many of its effects are likely to be undone before they ever bite. I suspect this is no accident. Budget wonks knew exactly what would happen when Congress agreed to delay the sequester from January 1 to March 1 rather than March 28.
A month’s worth of sequester will be disruptive to business. And federal agencies will be spending weeks adjusting to cuts that may never happen instead of doing their real work. But it will give political cover to tea party Republicans, who can claim a fiscal trophy. And give Democrats the opportunity to blame the GOP for a potential parade of horribles, from airport delays to toxic meat. But, soon enough, it will be just another footnote in Washington’s shameless tale of fiscal irresponsibility.
http://www.csmonitor.com/Business/Ta...All+Stories%29
That was a sunset effect though, and happened automatically. It's not like the Republicans agreed to raise taxes. Saying they "agreed" to tax increases is like saying that someone agrees to having their knees broken when they don't pay a mob loan. It's technically correct, but not done with great willingness.
hard to take obama seriously about his concerns for our national debt, and how to repair it, when his own "job czar" (jeffrey immelt) is the CEO of GE and tied to a special interest faction headed by billionaire pete peterson. this 'fix the debt' group has as one of its goals, the eradication of social security. the CEO's, such as immelt, that support the lobbying efforts of peterson's special interest group are at the same time, underfunding workers' pension plans while securing and increasing their own. meanwhile, obama continues to refer to some of the plans created by the simpson-bowles commission, even though every candidate that simpson and bowles endorsed (because they found them to be friendly to their plan) lost in the most recent election, which clearly suggests the american people are not in favor of their recommendations. so who is obama really listening to? who is he more concerned about appeasing? will the wealthy interest groups decide our economic fate using their 'zombie plans' that have essentially been voted down or will the president actually defer to the interest of the american people. i am skeptical that he will defer to the latter.
It's hard to take the Repugs seriously about the national debt with St Ronnie doubled it, and dubya tripled it.
Sequestration NIMBYism Grips GOP
Unwilling to team up with Democrats to replace sequestration with a mix of spending cuts and tax increases, and unable to pass a cuts-only sequestration measure on their own, Republicans’ official position is that they’ve made their peace with enduring, across-the-board spending cuts in perpetuity.
But now that those cuts are creating real consequences, individual members are experiencing buyer’s remorse. The only problem is, until they change their underlying position on replacing sequestration, the only thing they can do about it is whine.
Call it sequestration NIMBYism.
“It seems difficult to say with a straight face that completely eliminating a source of revenue for the National Park Service is a smart, targeted cut,” said Sen. John Thune (R-SD), a member of GOP leadership.
Sequestration is intended to be indiscriminate. It requires federal agencies to reduce spending by a certain percentage on each of their programs and activities.
That means all House and Senate members are likely to see some consequences in their districts and states. But when those consequences materialize, Republicans either blame the administration or plead for special treatment.
http://tpmdc.talkingpointsmemo.com/2...-grips-gop.php
Repugs refusing to eat their own dog's lunch
This more along the line the Repugs had in mind, ing over OPK, Other Peoples' Kids
Poor Kids Booted from Their Preschool Programs Thanks to Sequestration
The early childhood education program Head Start provides educational opportunities specifically to low-income kids. But 70,000 of those students will lose the opportunity to be in the program as a result of the drastic reductions in funding triggered by sequestration.
http://www.alternet.org/news-amp-pol...tter809825&t=3
So Repugs don't like just tiny bit of govt austerity, their 0.0x whatever sequestration cuts that they ridiculed as easy and insignificant?
And they want to pass Ryan's much deeper austerity?
Of course, the corrupt multi-millionaires in Congress are Cons utionally protected from austerity.
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