The Sequester
hat if I told you I could afford a mansion by taking out a loan for the down-payment, and then borrowing successively increasing amounts of money every year to pay the mortgage. Would you consider me wealthy or prosperous? No, of course not- you'd tell me that eventually, I'll have to pay it all back, and I'll then be poorer than ever before because of the interest payments. Well, that is exactly what the Democrats are trying to make the US federal government continue doing. They spent trillions of dollars that we did not have during Barack Obama's first term to give the illusion of economic growth. They want to keep increasing the rate of this spending to sustain the illusion and avoid ever having to pay off our debts. However, as our friends in Europe should now be very familiar with, all debts must eventually be paid off, and the longer you wait, the more painful it is.
So now, in an effort to force a slight move in the direction of fiscal sustainability, the Sequester is approaching. The Sequester was originally proposed by Jack Lew and pushed by Barack Obama, as a means to force Republicans to agree to more tax hikes. Congressional Republicans agreed to it, because they felt they could use it as a means to force Obama to agree to more spending cuts. But of course, nobody can agree on anything, and so the Sequester is going to be triggered- consisting of a tiny cut in the rate of increase of federal spending over 10 years. I repeat: this is a cut in the rate of increase in federal spending, not even a real spending cut. As in, we're still digging ourselves deeper in debt every year through federal spending, but we're going to do it ever so slightly slower. You can see from the graph here [link] how tiny and insignificant this 2.7% cut really is.
Yet, Barack Obama is crying bloody murder. [link] He is saying that federal spending must always keep rising, or the entire government will just collapse, and the economy will follow. If our economy can't function without federal spending rising faster than the GDP is growing, and the federal government can't function without growing faster than inflation every year, then the President has left us with a severely broken system. You can see in the third graph here [link] that the private sector is in a real Great Depression, and that all growth in the GDP that has been registered over the last 5 years has been purely from increased deficit spending, not from real economic growth.
This means the US economy has not recovered at all. We've only papered over the cracks with borrowed money that will need to be paid back eventually, with more interest the longer we wait. [link] There is no better time to pay off our debts than right now. Unfortunately, doing so will require far larger cuts than the Sequester will bring, and will remove the illusion of growth that the Democrats have worked so hard to build. We're now at the hangover from the Keynesian binge: [link]
Contrary to left-wing belief, the solution to a hangover is not "more booze!" Detoxing from our addiction to government spending will be painful, but it is the only way to avoid Greek-style collapse and return to real, sustainable growth of prosperity.
From an International Perspective,
we can see these same issues popping up around the world. Greece is in total collapse as they try to climb out of their debt hole. Most of Europe has slid back into recession as the unsustainable Keynesian spending comes to an end. The ruling French Socialist Party has blamed Europe's problems on "austerity," even as their own tax hikes have sent France back into recession without a drop of real spending cuts.
The whole world will now see that the only countries that truly recovered from the 2008 Great Recession are those that avoided the temptation of Keynesian stimulus, opting instead for free market reforms to lift the burden of government off the backs of the entrepreneurs and innovators. Switzerland [link] can now laugh at Germany [link] and the rest of the European Union [link] from their relatively free-market mountaintop.
Comments79
Join the community to add your comment. Already a deviant? Log In
You need another fiscal cliff, followed up by a fiscal parachute jump, topped off by a fiscal death-dive. If the GOP really gave a shit, they'd agree to the tax rises proposed by the Dems, instead of filibustering their country into bankruptcy.
Tax hikes are the absolute surest way to hurt the economy while doing nothing to actually fix the deficit crisis.
Well, sure as hell they aren't going to cut a trillion dollars from the budget any time soon, and if it came down to it the GOP wouldn't have the balls to do that either, so either taxes are going up, or the country's going bust.
Sorry, but cutting public medical spending on its own will not nullify the US deficit. And linking to a graph drawn by someone three years ago on the presumption that the debt will be just flat-out ignored does not justify your statement.
The best solution would be to double income tax.
The best solution would be to double income tax.
Double the income tax!? Do you have any idea how devastating that would be for the economy? We'd collect less revenue than we do now, simply because of the resulting recession and the fleeing of the rich from the country. It seems you have a lot to learn about economics before you can make any reasonable suggestions. And the debt is being ignored. This graph [link] drawn by the CBO within the last two months, is really not much different than the one from 3 years ago that I linked to. Look at how tiny the sequester really is there.
![[link]](https://www.deviantart.com/users/outgoing?http://en.wikipedia.org/wiki/File:CBO_Budget_Deficit_Assuming_Continuation_of_Policies.png){kind=link}
It wouldn't be devastating to the economy at all. It is a necessary measure. It is utterly laughable that people on six figure salaries pay as little as 16% income tax, and your country is humming and ahhing over how it's going to deal with the deficit. Utterly laughable.
Where do you think the middle and upper classes will go? The Cayman Islands? Mexico?
Where do you think the middle and upper classes will go? The Cayman Islands? Mexico?
View all replies
"Detoxing from our addiction to government spending will be painful"
Only for people with lots of debt, like recent college graduates, middle class families with home loans, lower-middle class families with credit card debt, poor people with outstanding debt that hampers their economic livelihood... oh, actually... that's everybody, basically.
...yeah, that would be painful. Very. And crippling. Crap, you think consumer demand is at an all time low right now? That happens, ain't nobody buyin' ANYTHING. They'll be lucky if they can find a nice bridge to lie under at night.
Only for people with lots of debt, like recent college graduates, middle class families with home loans, lower-middle class families with credit card debt, poor people with outstanding debt that hampers their economic livelihood... oh, actually... that's everybody, basically.
...yeah, that would be painful. Very. And crippling. Crap, you think consumer demand is at an all time low right now? That happens, ain't nobody buyin' ANYTHING. They'll be lucky if they can find a nice bridge to lie under at night.
"The whole world will now see that the only countries that truly recovered from the 2008 Great Recession are those that avoided the temptation of Keynesian stimulus, opting instead for free market reforms to lift the burden of government off the backs of the entrepreneurs and innovators."
Australia, welfare/heavy regulator state that recovered from the recession yonks before the rest by using government stimulus spending. Once again proving Schemer wrong.
Australia, welfare/heavy regulator state that recovered from the recession yonks before the rest by using government stimulus spending. Once again proving Schemer wrong.
Oh lookie, a link to heritage, what a great and honest source you could be using.
How about you actually look at an Australian site for once and get the facts straight from the horses mouth, i'll help you and give you the link to the Australian governments department of human services site so you can peruse through all the wonderful tax funded payments and services i've put money into through tax.
As for regulations, here's a link which will lead you to a database of all of them: [link]
And of course, for just a simple category in which Australia is more regulated than America.... Gun control, 'nuff said.
What's debt got to do with it? I wasn't talking about debt, i was talking about the stimulus.
"The whole world will now see that the only countries that truly recovered from the 2008 Great Recession are those that avoided the temptation of Keynesian stimulus,"
Do you stand by this statement? Do you deny that Australia's stimulus spending was responsible for its recovery? Do you disagree with these three articles praising the Australian stimulus? [link] [link] [link]
How about you actually look at an Australian site for once and get the facts straight from the horses mouth, i'll help you and give you the link to the Australian governments department of human services site so you can peruse through all the wonderful tax funded payments and services i've put money into through tax.
As for regulations, here's a link which will lead you to a database of all of them: [link]
And of course, for just a simple category in which Australia is more regulated than America.... Gun control, 'nuff said.
What's debt got to do with it? I wasn't talking about debt, i was talking about the stimulus.
"The whole world will now see that the only countries that truly recovered from the 2008 Great Recession are those that avoided the temptation of Keynesian stimulus,"
Do you stand by this statement? Do you deny that Australia's stimulus spending was responsible for its recovery? Do you disagree with these three articles praising the Australian stimulus? [link] [link] [link]
That's nothing. If you tried to just list the titles of every US federal regulation, the list would be thousands of pages long. "The whole world will now see that the only countries that truly recovered from the 2008 Great Recession are those that avoided the temptation of Keynesian stimulus,"
Do you still stand by this statement, even in spite of the evidence that Australias economy resisted recession through the use of the-great-and-mighty Rudds stimulus? [link] [link] [link]
Do you still stand by this statement, even in spite of the evidence that Australias economy resisted recession through the use of the-great-and-mighty Rudds stimulus? [link] [link] [link]
Wait, a country in which if you smuggle a Poptart into the country by plane, you get fined excessively? Where produce is dirt cheap but a used game is taxed up to about $90 US Dollars? Where any manufactured good is spiked in cost compared to the States? Which has 37 government funded universities but only 2 private ones barring specialty schools? Which has universal health care? Which has the highest housing prices and household debt in the world? Where failure to enforce regulations on health care corporations has bit them square in the ass? [link] Where the insurance group HIH collapsed, the largest corporate collapse in Australia's history, was due to systematic weaknesses in the APRA's administration of the regulatory system? [link]
It's a beautiful country, while that is not without it's faults, is not libertarian in the slightest if you knew anything about the country beyond a Heritage Foundation article.
It's a beautiful country, while that is not without it's faults, is not libertarian in the slightest if you knew anything about the country beyond a Heritage Foundation article.
Yes, I'm comparing that country to the one where 5-year-olds get fined hundreds of dollars for selling lemonade on their front lawn.
Nonono Australia is the Libertarian paradise that TBS wants to live in when he finally gets round to putting his money where his mouth is.
Poor bloke would go mad the moment he gets confronted with just our customs system when he gets off the plane.
"What? You're going to force me to open my bag? TYRANNY!!!!"
"What? You're going to force me to open my bag? TYRANNY!!!!"
Technically Australia is both more socialist and more libertarian than the United States because it is a social-democracy, while the United States' government is a combination of fusionism and social-liberalism.
I'm not an economist so I don't know what the actual solution to these problems are or what implications solutions would have. In the end, I find both sides of this sequester debate to have valid points. Certainly cutting spending is important, but should it occur indiscriminately and recklessly? Although you say it has to be painful, surely we could make it a bit less painful. I certainly don't want to see institutions or people cut, such as airport employees that help assure safety and efficiency, something I'm willing to pay taxes for. Of course, on the other hand, do we have to just deal with such issues to force cuts? I'd hope it wasn't necessary, but I don't know if that's the case.
Mmm. Republican thinking: Balance the budget on people who are too old and ill to work and will be fucked without the help, while not touching a dime from anyone who can actually afford the drop.
Democrat thinking: Take money from those people and organizations that can actually afford to lose the money without being hurt. Not a real solution, apparently.
Democrat thinking: Take money from those people and organizations that can actually afford to lose the money without being hurt. Not a real solution, apparently.
I don't think taxes are really the issue at this point. More so, it's the budget. I think, like most people, I'd prefer taxing the wealthy as you say while working out spending intricately. I believe that's Obama's stance, but will he follow through with that? He has stalled on budget issues in the past.
The problem is most of the budget is things we can't afford to cut. We're underfunded on infrastructure, the people on benefits still don't have living wage jobs available to switch to, we're underfunded on education, and so on. Either that, or they're things we could get away with missing but would also be a literal drop in the bucket in terms of savings.
The things we can cut that will actually gain a lot of savings without fucking over a lot of people--mainly the military and company subsidies of various stripes--the Republicans refuse to touch.
On top of that... yeah, taxes are a big chunk of the problem, since a good chunk of the deficit is actually a decrease in tax revenue, not any increase in unnecessary spending.
Now, if we were talking an actual audit of overhauling all our systems to provide the same level of services but with more efficient methods, I'd be all up in that. But the Republicans aren't offering to do that any more than the Dems are. The Republicans just want to cut necessary services and fuck up the quality of what's left, and call it "savings".
The things we can cut that will actually gain a lot of savings without fucking over a lot of people--mainly the military and company subsidies of various stripes--the Republicans refuse to touch.
On top of that... yeah, taxes are a big chunk of the problem, since a good chunk of the deficit is actually a decrease in tax revenue, not any increase in unnecessary spending.
Now, if we were talking an actual audit of overhauling all our systems to provide the same level of services but with more efficient methods, I'd be all up in that. But the Republicans aren't offering to do that any more than the Dems are. The Republicans just want to cut necessary services and fuck up the quality of what's left, and call it "savings".
Yes, the issue of cutting useful programs was one of my main points. It is difficult to create these cuts, especially arbitrarily, when this funding has clear benefits. One likely needs to consider how many people are affected by a cut before deciding upon it.
I support cutting military spending and subsidies, but the former is not a popular idea in either party or anywhere in the US still. People still think we need the biggest, best military ever, then wonder why we can't afford essential or beneficial programs. Obama at least wants to cut subsidies though.
I support cutting military spending and subsidies, but the former is not a popular idea in either party or anywhere in the US still. People still think we need the biggest, best military ever, then wonder why we can't afford essential or beneficial programs. Obama at least wants to cut subsidies though.
Personally I'd love to see our entire government system upgraded. All our buildings and infrastructure overhauled to be more modern, and both time- and energy-efficient. Like what we did with food stamps, going from the old paper system to the automatic electronic cards.
Problem is that would require the classic short-term spending for long-term savings... which is kind of impossible when you're cutting budgets before you can get away with the natural savings.
Honestly, most of our waste is entirely due to outdated systems that take more effort to use and maintain than they would if they were properly upgraded and repaired.
Problem is that would require the classic short-term spending for long-term savings... which is kind of impossible when you're cutting budgets before you can get away with the natural savings.
Honestly, most of our waste is entirely due to outdated systems that take more effort to use and maintain than they would if they were properly upgraded and repaired.