Currently one of the biggest news items nationally in the USA is that of the upcoming US federal budget cuts commonly referred to as sequester. Sequestration is a product of the 2011 budget deal. Part of that bill was a requirement that a bipartisan committee come up with a plan to cut the budget. If it failed, this would trigger a series of automatic budget cuts called sequestration. The result is about a 5% cut to domestic spending and a 7% cut to our military, or about an $85 billion cut from the annual budget, or about 2.3% of total government spending.
The democrats are railing against these budget cuts because they feel it will cut essential services and harm our economy. War hawk republicans are railing against the cuts because they think it will degrade our military readiness. The resulting shrieks are being replayed in both left leaning and right leaning news outlets. The irony of this is that government (many of those same politicians in fact) voted for this outcome in the first place when they approved the new debt limit deal in 2011. At that time everyone agreed that our debt was out of hand and the 60% increase in our national debt was a disgrace ($10 trillion when Bush left office to $16 trillion today). But now that they have to take the medicine they prescribed they are whining like spoiled children. It's even funnier still because both parties sabotaged the bipartisan budget negotiations by demanding things the other side would never accept.
So the question that remains is, how bad is this for our economy? On the one hand, a government budget cut tends to go directly to GDP, just as any spending cut does (either public or private). On the other hand, we have a $15 trillion GDP, so $85 billion is 0.006% (rounded up) of our GDP. Compare that to the $160 billion dollar Obama tax increase for the 2013 fiscal year, a tax increase Obama has sworn will not affect the economy at all. After all, these budget cuts are almost half the amount of new tax revenue. So if this tax increase (which typically decreases GDP the amount of the increase) won't affect the economy according to our dear leader, why such hew and cry about the smaller sequestration cut? Either he is lying about the tax increase, lying about the budget cuts, or he doesn't understand basic economics.
The real reason for this is obvious, and obviously partisan. Democrats love government spending and high taxes. They hate small government, low budgets and generally allowing anyone who is not living in abject poverty keeping the money they earn. Conversely, while republicans love smaller government (supposedly, I would be remiss in not pointing out that the Bush administration increased the budget and budget deficits as well) they are not generally fans of shrinking our military (or allowing the rest of the world govern themselves without being beholden to our military might).
So which side should we listen to? Neither. It's well known that budget cuts and tax hikes harm economic expansion. It is ludicrous and ludicrously partisan for either side to say otherwise. The silver lining on this whole turd sandwich (mixed metaphor, which should make it easier to understand for beltway insiders) is that neither the tax increase nor the budget cuts are actually large enough to make much difference. What we should be rooting for is stasis. Let both parties paralyze our government, let sequestration go through. It is the first real budget discipline I have seen out of government in my lifetime, which means that it likely will not survive. My hope is that once sequestration goes through and both parties pout like the spoiled children they are, we will see a more serious discussion about budget and tax reform. I doubt this will happen, but I can hope.
Tuesday, February 19, 2013
Wednesday, February 6, 2013
The Beast Whose Appetite is Never Sated
Now that we as a nation are done with our fight over taxes (the expiration of the Bush tax cuts) with Republicans having capitulated to the Democrats' demands for more revenue, we can lie back, relax, and let the economy recover without further destabilizing government intrusions... HA! HA! HA! HA! HA! HA! HA! HA!... Didn't know this was a humor blog did you?
No, we are now dealing with the imminent federal budget cuts called sequestration. And shock and awe, the Democrats, lead by our dear leader Obama, are saying that any deal to avert the budget cuts must include... Drum roll please... MORE REVENUE! Who would have thunk it? Turns out that the increase in taxes from Obama Care, the increased taxes in the budget deal, and the increased taxes from letting previous payroll tax cuts expire is not enough new revenue for the Democrats. Nope, they want even more tax revenue. And in typical jack ass, I mean donkey (the symbol of the Democratic party; see, it IS a humor blog), behavior, they are leaving the details up to the Republicans. After all, why get your fingerprints on the evidence of yet more theft from the US tax payers? Fortunately, the Republicans have responded to this appropriately by telling the Democrats to come up with their own deal and that new revenues are off the table (a more appropriate response than what I would have told them).
Lets hope that the Republicans have learned their lesson from the Bush tax cut expiration. Lets hope that this time they will stay united as a party and use the sequestration as the bludgeoning tool it was designed to be to force Democrats to come to the table and actually deal with our budget woes. I won't be holding my breath for this. In all likelihood, neither party will get the other to agree to anything, and sequestration budget cuts will occur as planned. At this point, we should be happy if any fiscal discipline occurs at all.
And this leads me to my greater point, the source of the title of this article, namely that it should now be clear to everyone that no amount of new revenue will ever satisfy the appetites of the left. Or, as Margarette Thatcher once famously said: "Socialist governments traditionally do make a financial mess. They always run out of other peoples' money." To this I would add, that they are always hungry for more. The left has all sorts of grand plans for US tax payers' earnings, but letting us keep them are not among them.
This is why I think it is important for the Republican party to embrace the sequestration budget cuts and use it as a bludgeoning tool against the ravenous left. The left has shown themselves incapable of even a minute amount of budgetary discipline, thus it must be imposed upon them. Because if it is not, this country will become just another bloated first world country with high unemployment, high deficits and be on the verge of economic collapse when international bond markets stop buying our debt.
This will not be an easy task. I fully expect the democrats to pull the old "Think of the children!" histrionics. Be prepared for countless remonstrations about how sequestration will starve the hungry, throw women and children on the streets, and generally do all sorts of horrible things. It will be up to the Republicans to come together as a party and make the case that without sequestration or other budget cuts, our country will be in even worse shape (i.e. we are courting Grecian style economic collapse). Who knows how that debate will come out.
No, we are now dealing with the imminent federal budget cuts called sequestration. And shock and awe, the Democrats, lead by our dear leader Obama, are saying that any deal to avert the budget cuts must include... Drum roll please... MORE REVENUE! Who would have thunk it? Turns out that the increase in taxes from Obama Care, the increased taxes in the budget deal, and the increased taxes from letting previous payroll tax cuts expire is not enough new revenue for the Democrats. Nope, they want even more tax revenue. And in typical jack ass, I mean donkey (the symbol of the Democratic party; see, it IS a humor blog), behavior, they are leaving the details up to the Republicans. After all, why get your fingerprints on the evidence of yet more theft from the US tax payers? Fortunately, the Republicans have responded to this appropriately by telling the Democrats to come up with their own deal and that new revenues are off the table (a more appropriate response than what I would have told them).
Lets hope that the Republicans have learned their lesson from the Bush tax cut expiration. Lets hope that this time they will stay united as a party and use the sequestration as the bludgeoning tool it was designed to be to force Democrats to come to the table and actually deal with our budget woes. I won't be holding my breath for this. In all likelihood, neither party will get the other to agree to anything, and sequestration budget cuts will occur as planned. At this point, we should be happy if any fiscal discipline occurs at all.
And this leads me to my greater point, the source of the title of this article, namely that it should now be clear to everyone that no amount of new revenue will ever satisfy the appetites of the left. Or, as Margarette Thatcher once famously said: "Socialist governments traditionally do make a financial mess. They always run out of other peoples' money." To this I would add, that they are always hungry for more. The left has all sorts of grand plans for US tax payers' earnings, but letting us keep them are not among them.
This is why I think it is important for the Republican party to embrace the sequestration budget cuts and use it as a bludgeoning tool against the ravenous left. The left has shown themselves incapable of even a minute amount of budgetary discipline, thus it must be imposed upon them. Because if it is not, this country will become just another bloated first world country with high unemployment, high deficits and be on the verge of economic collapse when international bond markets stop buying our debt.
This will not be an easy task. I fully expect the democrats to pull the old "Think of the children!" histrionics. Be prepared for countless remonstrations about how sequestration will starve the hungry, throw women and children on the streets, and generally do all sorts of horrible things. It will be up to the Republicans to come together as a party and make the case that without sequestration or other budget cuts, our country will be in even worse shape (i.e. we are courting Grecian style economic collapse). Who knows how that debate will come out.
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