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“Not A Boon For Most Americans”: Congress Has Tackled The Deficit At The Cost Of The Economy

This morning, Eric Rosengren, chief executive of the Boston Federal Reserve, cautioned lawmakers against further fiscal retrenchment, lest they slow the recovery. As he said at the Global Interdependence Center’s Central Banking Conference in Italy: “Given the economic realities I would urge policymakers to consider scenarios where some elements of fiscal rebalancing take effect only after the economy has more fully improved.”

He’s right, in large part because Congress has already done a fair amount of deficit reduction. Beginning in 2011, with unemployment still high and the economy on a long, slow climb out of recession, Congress — led by a new Republican majority in the House of Representatives — moved to make big cuts in medium-term discretionary spending. It slashed $1 trillion with the Budget Control Act of 2011, and followed that with hundreds of billions more in spending cuts and tax increases with the fiscal cliff deal and sequester.

Now, as a result of this deficit reduction, the Congressional Budget Office projects a $642 billion budget deficit for fiscal year 2013, down $200 billion from its projection at the beginning of the year, and the lowest level of deficit spending since President Obama entered office. The near-term deficit projection also shows improvement; the CBO estimates a 2015 deficit of $378 billion. For Washington’s deficit hawks, this is cause for celebration. It’s a sign the federal government is on its way to a more sustainable debt load.

But this rapid deficit reduction is far less of a boon for most Americans, who have to live in an economy that’s been largely stalled by Congressional inaction. At 7.5 percent, unemployment is still too high, and there’s little sign of rapid improvement. According to most projections, joblessness won’t reach pre-recession levels for another three years.

Congress’ push for deficit reduction has a lot to do with this. As noted in the New York Times last week: “The nation’s unemployment rate would probably be nearly a point lower, roughly 6.5 percent, and economic growth almost two points higher this year if Washington had not cut spending and raised taxes as it has since 2011.”

To put that in more concrete terms, 1.5 million more Americans would have jobs if not for Washington’s decision to pursue deficit reduction in the midst of a sluggish economy.

Unfortunately, news of successful deficit reduction is unlikely to result in any respite from new cuts or tax increases. The Obama administration still has its Social Security cuts on the table — as part of a potential “grand bargain” — and Congressional Republicans are gearing up to demand still more spending cuts in exchange for raising the debt ceiling.

Will Washington avoid endangering the still-fragile recovery with further deficit reduction? If the refusal to end or replace the sequester is any indication, I wouldn’t hold my breath.

 

By: Jamelle Bouie, The American Prospect, May 16, 2013

May 21, 2013 Posted by | Deficits | , , , , , , , , | Leave a comment

“Eyes Wide Shut”: GOP Representatives Now Realize Effects Of The Sequester They Voted For

Representative Renee Ellmers (R-NC) introduced a bill on Tuesday that returns sequester-cut funding to physicians to provide chemotherapy drugs to patients. The Cancer Patient Protection Act of 2013, H.R. 1416, restores sequester cuts made to Medicare Part B in order to provide cancer treatment and reimburse physicians for the costs of cuts already made.

Ellmers, who voted in favor of the Budget Control Act of 2011, called these cuts to cancer treatment “unintended consequences.” However, the cutback in funding wasn’t accidental, as Ellmers suggests—the Budget Control Act explicitly orders a sweeping two-percent cut to Medicare.

Despite her efforts to reverse its inevitable effects, Ellmers still defends the sequester. “I do believe it will start a very important process that will help our economy to start to grow,” she said. “The debt that we have at the federal level is our biggest threat for our country.”

Representative Blake Farenthold (R-TX) joins Rep. Ellmers in opposing elements of sequestration despite having voted for it. Farenthold, among others, was disturbed to hear of the closing of 149 air traffic control towers—especially those in Texas. The congressman sent a letter to FAA Deputy Administrator Michael Huerta, stating, “I am deeply troubled for your public statements and proposed actions regarding the effect of the sequester on smaller, local airports. These airports have long played a vital role in economies across the country.”

Congressman Rodney Frelinghuysen (R-NJ) was among the 269 representatives who voted in favor of the Budget Control Act, yet he too did not hesitate to criticize its effects. In Frelinghuysen’s district, children in Washington Township may be unable to enroll in Head Start programs due to lack of funding. Frelinghuysen said, “I view potential budget cuts to such an important program as another reason why sequestration is a bad idea.”

To date, sequestration has had significant effects on many Americans, and is expected to cause upward of $85 billion in cuts to communities across the country. The elderly have lost vital programs like Meals on Wheels; veterans may face difficulty accessing mental health, substance abuse, and job counseling services; and funding can be cut for medical research of illnesses like Alzheimer’s Disease.

The effects of sequestration are tangible; millions across the country have faced cuts across a range of industries. Rather than criticizing the effects of the sequester and introducing legislation to obtain certain exemptions from these imminent cuts, perhaps members of Congress like Ellmers, Farenthold and Frelinghuysen should have weighed the consequences before even voting for the measure.

 

By: Allison Brito, The National Memo, April 11, 2013

April 13, 2013 Posted by | GOP, Sequester | , , , , , , , | Leave a comment

“The Hostage Takers”: Blame Eric Cantor And Paul Ryan For The Sequester

John Boehner’s laughably weak leadership as House Majority Leader surely must be seen as being partly to blame for the sequester — the Tea Party caucus in Congress clearly has a tight leash on the Speaker.

But at least Boehner tried for a “Grand Bargain” with President Obama in 2011, only to be reined in by Eric Cantor and Paul Ryan, according to a recent interview Cantor conducted with The New Yorker‘s Washington correspondent, Ryan Lizza. Cantor admitted that there was a final meeting with Boehner, Ryan and himself where Boehner wanted to accept the president’s $1.2 trillion offer, but was talked out of it by Cantor and Ryan.

“The reason why we said no in that meeting, ‘don’t do this deal,’ was because what that deal was, was basically going along with this sense that you had to increase taxes, you had to give on the question of middle-class tax cuts prior to the election,” said Cantor. “And you knew that they had said they weren’t giving in on health care.”

So basically, this was about the 2012 election. Cantor and Ryan wanted to let the voters decide on taxes and health care instead of preempting it with the Obama-Boehner Grand Bargain. Then in November, the American public overwhelmingly voted for President Obama and his balanced approach to deficit reduction and growing the economy through a mix of spending cuts, tax revenues and closing corporate loopholes — a result that has been confirmed in repeated polls. The American people also doubled down on Obamacare by re-electing the president.

Cantor concluded the interview with Lizza with this telling remark: “That’s why we said, ‘Let’s just get what we can now, abide by our commitment of dollar-for-dollar, and we’ll have it out, as the president said, on these two issues in the election”.

The failure of the Grand Bargain resulted in the Budget Control Act of 2011, which included the automatic budget sequestration.

So it is now clear that Cantor and Ryan killed the Grand Bargain, leading to the sequester and the onset of European-style austerity and possibly another recession, and their basis for that was their supreme confidence that they would win the election. What is unclear is why, after their ideas were thoroughly rejected, they are defying the will of the American people and a popular president by refusing to compromise.

Could it be that they wanted this all along? Here is what Ryan said after the law putting the sequester in place was passed in August, 2011:

“What conservatives like me have been fighting for, for years, are statutory caps on spending, legal caps in law that says government agencies cannot spend over a set amount of money. And if they breach that amount across the board, sequester comes in to cut that spending, and you can’t turn that off without a supermajority vote. We got that in law. That is here.”

By: Josh Marks, March 1, 2013, The National Memo

March 2, 2013 Posted by | Sequester | , , , , , , , , | Leave a comment

“More Republican Denial”: This Time, The People Are On To The GOP

Whose “idea” was the sequester, and why should it matter? My Twitter feed these last couple of weeks has been overflowing with people going beyond the usual “communist” and “idiot” name-calling that I get every day and throwing the occasional “liar” in there because I “withhold” the information that the sequester was the Obama administration’s idea. Very well, consider that nugget hereby unwithheld. Let’s grant that this is true. But it’s true only because the Republicans were holding a gun to the administration’s head—and besides, the Republicans immediately voted for it. In any case the important thing now is that outside of Fox News land, it’s an unimportant fact whose “idea” it was. The Republicans are partial owners of this idea, and as the party that now wants the cuts to kick in, they deserve to—and will—bear more responsibility for the negative impacts.

A trip back through the full context of this saga tells the story. The idea of having these deep budget cuts called “sequestration” goes back to the summer of 2011 and the debt-ceiling negotiations. You’ll recall readily enough that it was first time in history that an opposition party had attempted to attach any conditions to increasing the debt limit. You’ll also recall that the Republicans made this intention quite clear from the beginning of 2011; indeed, from campaign time the year before. Remember Obama’s quotes from late 2010 in which he said he felt sure the Republicans would behave more reasonably once the responsibility to govern was partly theirs?

Instead, they almost crashed the economy. And they were also clearly the side pushing for drastic spending cuts. Let’s go back quickly over a partial 2011 timeline. In April, Obama spokesman Jay Carney said it was the president’s position that raising the debt limit “shouldn’t be held hostage to any other action.” On May 11, Austan Goolsbee, then Obama’s chief economic adviser, said that tying a debt-limit increase to spending cuts was “quite insane.”

On May 16, the United States went into technical default, but the Treasury Department was able to string things along a few more weeks. Tim Geithner made it clear that the real problem would hit August 1. A key moment, as Scott Lilly of the Center for American Progress wrote in The Huffington Post, came on May 31. That’s when the GOP-run House voted on Obama’s request for a “clean” debt-limit increase. It failed, and all 236 Republicans voted no.

All this time, and right on up to August 1, Republicans were screaming for deep budget cuts, and the administration was saying no. But the Republicans had the leverage because it actually seemed plausible they were crazy enough to push the country into default. And so at that point, at least according to Bob Woodward in his new book, Jack Lew, then the budget director and now Obama’s nominee for Treasury secretary, originally came up with the notion of sequestered cuts. Or maybe it was Gene Sperling. The White House’s idea was based on language from the 1985 Gramm-Rudman-Hollings deficit-reduction act. It was also the White House’s notion that if the “trigger” was hit, what would kick in would be not only automatic budget cuts but also automatic revenue increases (an idea Republicans refused to go along with).

So fine, the White House proposed it. It did so only after months of Republicans publicly demanding huge spending cuts and refusing to consider any revenues and acting as if they were prepared to send the nation into default over spending. In other words, this was the administration’s idea in much the way that it’s a parent’s “idea” to pay ransom to a person who has taken his child hostage. There was a gun to the White House’s head, which was the possibility of the country going into default.

And then, when it was all put into legislation, it was the Republicans who passed the Budget Control Act of 2011 in the House, with 218 of them voting yes. So even if administration officials proposed it, it would have remained just a proposal if those 218 Republicans hadn’t supported it (no House Democrats backed it). Most Republicans agreed at the time that the sequestration trigger was a good thing—that it would force everyone to get together and agree to a path forward and a long-term budget deal.

Let’s say that I’m having a dispute with a neighbor I don’t really like or trust about some invasive weeds infesting both of our properties. We consider a range of options and then finally he proposes a solution that isn’t very appetizing to either of us—it’s expensive, might kill a lot of grass, say, or a couple trees. It’s not exactly desirable to either of us, but I endorse his suggestion and share the costs of implementation of his plan. If it ends up killing grass or trees, am I really then on firm moral ground in pointing my finger and saying, “Hey, it was your idea, bub”?

I guess maybe conservatives think that way, but of course I don’t. I assented to the plan. I share responsibility for the consequences. Where my little analogy collapses is that in my hypothetical, my neighbor and I are more or less equally affected by the negative outcome. The Republicans’ ace card is that they know, or they hope they know, they are not equally affected. Austere cuts will harm the economy, and the blame will fall on the president.

Normally yes. But the majority of the people are onto them. And it sure isn’t going to be looking very responsible to people, as the March 1 sequestration deadline approaches, for Republicans to be going before the cameras and saying that the cuts are unfortunate but necessary medicine, or whatever formulation they come up with. They’ve wanted these spending reductions for two years. It hardly matters much who invented the mechanism for the cuts. What matters, as the Republicans will find out, is that the people don’t want them.

 

By: Michael Tomasky, The Daily Beast, February 19, 2013

February 20, 2013 Posted by | GOP, Sequester | , , , , , , , | Leave a comment

“Weather Vane Man”: Tracking Paul Ryan’s 5 Different Positions On The Sequester

House Republicans are attempting to blame Democrats and President Obama for “sequestration,” the automatic budget cuts that will begin taking effect on March 1 if Congress fails to avert them. But even as they cast that blame and ignore their own role in creation of the sequester, which wouldn’t exist had Republicans not refused to raise the debt ceiling in August 2011, Budget Committee Chairman Paul Ryan (R-WI) is expected to count the sequester’s automatic cuts in the next version of his budget, BuzzFeed reports:

According to two senior GOP aides familiar with Ryan’s thinking on the budget, the Wisconsin Republican and former vice presidential candidate will use the so-called sequester as part of the baseline level of spending for his budget.

Ryan’s position on the sequester has changed multiple times:

1. Helped make the sequester happen. Ryan was among the Republicans leading demands for spending cuts to offset a debt ceiling increase in the summer of 2011, and was among the leaders who refused to consider new revenues in those negotiations. Had Republicans not refused to raise the debt ceiling in the first place, the sequester wouldn’t exist.

2. Voted for plan to create the sequester, then bragged about it. Ryan took credit for the sequester in August 2011, bragging to Fox News that it guaranteed the massive budget cuts Republicans were seeking. “We got that in law,” he boasted. On the House floor, he said the Budget Control Act’s spending cuts were “a victory for those committed to controlling government spending.”

3. Called the sequester “devastating” during the presidential election. Ryan blasted Obama for wanting the sequester’s “devastating defense cuts” to take place during the presidential election, when he was the GOP’s vice presidential candidate.

4. Blamed the likelihood of the sequester occurring on Obama. The sequester “will probably occur” because “the president has not a proposal yet on the table,” Ryan told CBS News last week. “Don’t forget it’s the president who first proposed the sequester. It’s the president who designed the sequester as it is now designed,” he added.

5. Will include sequester cuts in his latest budget.

This is hardly a new strategy for Ryan, who crisscrossed the country blasting Obama for cutting Medicare spending even as he included the cuts in his last budget proposal and made even bigger changes to the program.

 

By: Travis Waldron, Think Progress, February 15, 2013

February 18, 2013 Posted by | Budget | , , , , , , , , | 1 Comment

   

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