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Let Sequestration Happen

A first step in sobering up Washington.

by
Tom Blumer

Bio

February 22, 2013 - 12:00 am

President Barack Obama clearly doesn’t like how the threat of sequestration, an idea he owns but now dishonestly wants to disown, is working out.

In a Tuesday speech, Obama went into campaign mode overdrive, claiming that — as summarized in a brilliant Tuesday evening Wall Street Journal editorial with the even better title “President Armageddon” — “if Republicans don’t raise taxes in return for more spending, the world will end.”

Despite a fiscal cliff deal which included $15 billion in spending “cuts” (actually “reductions in projected spending”) and over $600 billion in tax increases, the president is still demanding more from “the wealthiest Americans and biggest corporations.” Despite the fact that his administration’s has spent 26 percent more during its first four years than the George W. Bush administration spent during its final four, Obama and Democratic leaders continue to insist that the federal government doesn’t have a spending problem. Despite running up $5.9 trillion in additional debt, much of it driven by congressional and executive actions during Obama’s first two years which have unfortunately never been reversed, Obama contemptuously refers to the “so-called debt ceiling.”

As to the inane argument that a roughly 1.2 percent reduction in projected spending ($44 billion, not $85 billion, compared to annual spending of about $3.6 trillion) will all by itself, in Obama’s words, “hurt our economy … add hundreds of thousands of Americans to the unemployment rolls … (and) the unemployment rate might tick up again,” all of this is already happening. House Speaker John Boehner’s current and hopefully future firm position on sequestration has nothing to do with it.

The economy is already in a “hurt” condition. January’s initial reading on the nation’s gross domestic product (GDP) during last year’s fourth quarter was that it contracted by an annualized 0.1 percent. Though it appears that this number may go positive in subsequent revisions, the fact remains that the economy is closer to going back into recession than it has been at any other time since the last one officially ended three and one-half years ago.

Last week, Bloomberg News exposed internal emails revealing how Walmart executives are nearly panic-stricken about early sales during its February reporting period, describing the results thus far as “a total disaster.” I have separately confirmed that top management’s serious concerns have been shared with frontline store managers.

The internal company correspondence largely blamed the slump on the end of the two percentage point Social Security payroll tax cut which had been in place for two years. Obama agreed to allow this effective tax increase on 77 percent of Americans to happen during December’s fiscal cliff negotiations, representing a complete about-face from his and his administration’s warnings about the horrors which would ensue if reinstatement were to occur just ten months earlier.

Worriers at Walmart and other retailers (“Where are all the customers? And where’s their money?”) have another serious concern: gas prices, which as of when this column was submitted had risen for 32 straight days. According to USA Today, “Experts say prices should continue rising at least 5 cents a week until early April.” If so, they will break through the psychologically impactful $4 per gallon barrier. Additionally, note that the true national average gas price is probably six cents or so higher than the figure on which the establishment press usually relies. The average disposable income reduction caused by the payroll tax hike and the projected gas price increase on a family earning $50,000 per year is at least $150 per month.

Obama knows, or should know, that “hundreds of thousands of Americans” are constantly added to the unemployment rolls every week, even during good times. Of course, hundreds of thousand are also hired. The important current point is that for at least the past two years until very recently, weekly job losses as measured in filings for initial unemployment claims (before the Department of Labor’s exercise in distortion known as “seasonal adjustment”) had usually been declining in year-over-year comparisons by between 6 percent and 15 percent. During the past five reported weeks in 2013 combined, they’ve been virtually the same as they were a year ago.

The unemployment rate doesn’t need any help in “ticking up.” It rose to 7.9 percent in January. It has never been below 7.8 percent since Obama took office in January 2009. It will be no surprise to anyone if it “ticks up” again, without or without sequestration.

Sorry, Mr. President. The economic decay which you claim is a possible future event has been underway for several months — and if it gets worse, it will have almost nothing to do with sequestration, and almost everything to do with your economic and fiscal policies during the past four years. You’re the nation’s chief executive. If you want to find $44 billion to avoid your self-created catastrophe, do something about the at least $125 billion in improper payments the Government Accountability Office says your executive branch makes every single year.

At this point, allowing sequestration to happen is a precondition for beginning the sobering-up process the political class in Washington must undergo if this country is to financially survive.

So let it happen.

Along with having a decades-long career in accounting, finance, training and development, Tom Blumer has written for several national online publications primarily on business, economics, politics and media bias. He has had his own blog, BizzyBlog.com, since 2005, and has been a PJM contributor since 2008.

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Top Rated Comments   
Problem is, the sycophantic media will trumpet the ordeal as a republican creation, when clearly it is not. But the LIV's (low-information voters) will gobble it up and pretend to be smart anyway.

Facts mean nothing anymore; It's now a game of getting the masses to believe more numerous and greater lies. Rarely does this ever come to an epiphany until the LIV faces it for themselves. Until then, they go on believing they are right to blame republican meanies and that the magic negro is fighting against invisible forces trying to undo all his great desires. He positions himself the outsider, campaigning and telling stories while all the chumps nod their heads in agreement, then he goes back behind closed doors and signs into law the opposite of what he just said.

He loves this game and is another (huge) indicator of his mental/emotional problems.
1 year ago
1 year ago Link To Comment
The end must have a beginning somewhere. Perhaps it's best to have it start here. As Boehner said the other day "You created this mess! You fix it!" Either way it goes, Obama's going to try and fix the blame on the Republicans, even though this is on his plate. Better to stop aiding and abetting this fool ad have the chips fall where they may
At the end of the day, this is all theater in the run up to the 2014 congressional elections and better to have this hanging on the Dems' necks than to risk anymore Republicans staying home as they did in 2012.
1 year ago
1 year ago Link To Comment
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All Comments   (40)
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I hope that the sequestration takes place and lasts a good while but -- for a very cynical learning experience for all those who thinks government only takes from the economy and 'doesn't' contribute significantly back to the economy.

I suspect few have a clue how much just the DOD cuts alone will affect local, state and the national economies. There will be of course those government employees losing their jobs and spendable incomes but also, a very, very long chain of private sector companies who provide goods and services throughout all the government, that will effect the local and state economies and the greater national economy -- all at a time when unemployment is already high and the national economy stagnated just above the positive line.

Then of course, you have to then look at what the human cost for all the layoffs will cost communities, states and the federal government for lost health care benefits, unemplyment, food stamps, lost housing, lost mortgages to the financials and banruptcy to all credit holders of debt.

Its all a long chain of links that will allow for NO winners under todays economic circumstances!
1 year ago
1 year ago Link To Comment
Time and again we hear and read the same thing. The Republicans have to stand fast and fight for what they believe in. Well, just which part of the word "fight" do they not understand?
1 year ago
1 year ago Link To Comment
1 year ago
1 year ago Link To Comment
Did anyone see the clip of O's interview on the sequestor with Al "The Charlaton" Sharpton which Fox has been running all day? He says the usual, "the only thing holding Republicans together is a love of rich people", but it's THE WAY he says it. He sound off - or maybe on - his meds. Gone is the Bette Davis delivery of each line with strong emphasis at the end of every sentence. Maybe M.O. got jealous and tossed out his DVDs of Jezebel and The Little Foxes and he wasn't able to practice his Bette impersonation. Anyway, he seems confused, lost.
1 year ago
1 year ago Link To Comment
It's always funny to watch millionaires complain about "rich people".
1 year ago
1 year ago Link To Comment
If what Limbaugh and others claim is true, that even after the $44 B 2013 cut the gubmint will still spend at lewast $15 B more than in 2012, then this is the proverbial tempest in a teapot. If ObamaRx had one shred of integrity, he would be ashamed, but no shame in this clown.

Republicans, hold fast. The LSM is going to fillet you just for breathing, so you may as well do the right thing for a change.
1 year ago
1 year ago Link To Comment
Obummer was for sequestration before he was against it - it was also his idea before it evolved into a Republican idea. Can't seem to figure out how that works but I suspect the MSM is complicit somehow. The Republicans weren't smart enough to see a bad deal and rushed in headlong. Net result? They once again punted the can down the road. Now we are approaching the end of that road. Whats next? My best guess - another punt.

Sequestration is the perfect example of how this sleazy cast of characters on both sides of the isle create problems - then stand around clucking about it like a bunch of hens and nobody ever gets blamed for the resulting calamity. These bozos have been doing this crap for years and years and FINALLY some may be catching on. Hence Rush's remark yesterday paraphrasing Michele Obummer - "for the first time in my life"... Good GOD! I've been watching these slow speed yo-yo operators do this year after year. Now the problems are becoming so ominous that the option of punting the can is probably worse than fixing it. Trouble is none of them are smart enough to see this. Ever hear the old saying 'you can't see the forest for the trees'?

Vote them out - vote them ALL out - outlaw lobbyists from entering Washington DC. They should also be served a no-contact order with politicians.

Get rid of subsidies - ALL subsidies. If it can't fly on its own it doesn't need my money to make it fly. Solyndra anyone?

Vote them out!!! All of them. Thats the change DC needs!

Lets hope it'll happen.

I'm not hopeful.
1 year ago
1 year ago Link To Comment
Well, the house leadership was all fired up to appease the Tea party Movement and platform when this sequestration idea came about from the White House.

Strategically, it did two things! 1) it put pressure on the committee to find some kind of deficit and debt resolve and 2) it played directly into the ownership of the GOP/TeaParty platform during the run-up of the election campaign cycle.

So yes, as you say, the dem progressives once again was the smarter and only have to go back to the Tea Party campaign platform to prove their ownership of "slash the government" and "slash the spending" rhetoric. The GOP/TeaParty have had months to ponder the consequences of a sequestration 'politically' and all they come up with is, it was Obama's plan.
1 year ago
1 year ago Link To Comment
Democrats and Liberals constantly complain that Republicans and Conservatives won't go along with their plans and thwart the genius of the Pres at every turn. So they went along with something. Now you're complaining that they did so?

At least its a plan that cuts spending.
1 year ago
1 year ago Link To Comment
I too say let it happen. But Boehner and McConnell (among other RINOS) don't have the guts (or the brains) to do it. Besides, any cuts that are made this FY can always replaced and added to later on. The GOP needs to do something to assure the long-suffering base that they are listening to us.
1 year ago
1 year ago Link To Comment
If Boehner and McConnell would remove the mush from their mushmouths and articulate the positions that need to be taken, we'd have a chance. At a time when we need a US Grant to lead us, we have a bunch of George McClellans.
1 year ago
1 year ago Link To Comment
Obama will cause as much pain to the American people as he can get away with. He will at the same time blame Congress, and the media for the most part will go along with it.
1 year ago
1 year ago Link To Comment
oh but we can't do that. Both Chicken Little Obama and Foxy Loxy Boehner said the sky will fall and hit us all on the head.
1 year ago
1 year ago Link To Comment
Cuts target essential services such as 800,000 in the defense dept instead of tackling real waste. Even 2.4% should be able to be cut easily. Start with Depts of Education, Commerce, Environrmental Protection. Also cut Obama;s czars, his jet usage and the secret service. Cut DHS and cancel all the ammunition and drone orders.
1 year ago
1 year ago Link To Comment
Or significantly cut the ammo and drone orders and then deliver them to the US Border Patrol. Still let the DHS budget pay for it.
1 year ago
1 year ago Link To Comment
800,000 defense department federal government workers are hardly essential. Half that many should be plenty. The others you mentioned should be totally eliminated.
1 year ago
1 year ago Link To Comment
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