Feb 01 2013

Will bad news delay sequester?

Published by at 9:15 am under Trahant

trahant MARK
TRAHANT

 
Austerity

Will bad news delay the sequester? Wednesday the government released the fourth quarter’s Gross Domestic Product, the output of goods and service produced by labor in the United States. That number decreased by .01 percent. It doesn’t sound like a big deal, decimal point next to a digit that small, but it reflects a shrinking economy instead of a growing one. And the main reason for the contraction: Government spending.

From the report: “Real federal government consumption expenditures and gross investment decreased 15.0 percent in the fourth quarter, in contrast to an increase of 9.5 percent in the third. National defense decreased 22.2 percent, in contrast to an increase of 12.9 percent. Nondefense increased 1.4 percent, compared with an increase of 3.0 percent. Real state and local government consumption expenditures and gross investment decreased 0.7 percent, in contrast to an increase of 0.3 percent.”

In other words, government is shrinking across the board. And this is before the sequester. Those numbers will decline even more after the sequester begins.

At the White House, Press Secretary Jay Carney was asked about the data – and quickly blamed Republicans in Congress. “Talk about letting the sequester kick in as though that were an acceptable thing belies where Republicans were on this issue not that long ago, and it makes clear again that this is sort of political brinksmanship of the kind that results in one primary victim, and that’s American taxpayers, the American middle class,” Carney said. “You’re correct that the GDP number we saw today was driven in part by — in large part by a sharp decrease in defense spending, the sharpest drop since I think 1972. And at least some of that has to do with the uncertainty created by the prospect of sequester.”

Even though the Republicans have been arguing for a policy of contraction, a spokesman for House Speaker John Boehner, R-Ohio, said the House did vote to stop the cuts in defense spending. “Twice the House has passed legislation to replace them with common sense cuts and reforms. If there was any uncertainty late last year about the sequester, it was because the Democratic-controlled Senate, per usual, never lifted a finger to pass a plan to replace it,” Boehner spokesman Brendan Buck told Fox News.

A shrinking economy is not be popular. It might even be enough to get some movement to at least delay the sequester. After all, this year’s budget cut is across the board, causing chaos in programs that matter to a lot of people. If the sequester is delayed until next year, however, then the congressional appropriations committees could cut the same amounts but do so by picking and choosing from program alternatives. That would likely benefit funding for the Indian Health Service and the Bureau of Indian Affairs.

One plan that’s now getting discussion is Senate Majority Leader Harry Reid’s idea of delaying the sequester in small blocks of time. He suggested this week that one source to pay for that would be ending tax breaks for oil companies. He’s quoted by Talking Points Memo saying: “[T]here’s a lot of things we can do out there, and we’re going to make an effort to make sure that … sequestration involves revenue,” Reid added. “Remember, the American people still believe, by an overwhelming margin, that the rich should contribute to this. They believe that Medicare shouldn’t be whacked. They believe domestic discretionary spending has been hit very hard already. They believe that there could be a better way of dealing with defense than this meat cleaver that sequestration does.”

Will the Republicans play ball? And, does a contracting economy make a difference? Any answer to those questions would be more of a guess at this point.

One new approach is to let the sequester begin March 1 — and then negotiate changes. Sen. John Cornyn, a Texas Republican, said conservatives see these spending cuts as the only ones they are likely to get. But as a Defense hawk, Cornyn is not happy with defense cuts. So the thinking is let the sequester start and when the public sees how bad it is, they’ll press Congress to shift gears.

However I really don’t see how that works any better. The chaos will be bad in both domestic and defense — so the calls for changes will be coming from both sides. That doesn’t look like a path leading to a majority.

We’re now a month away from the sequester. Four weeks left to make a deal.

Mark Trahant is a writer, speaker and Twitter poet. He lives in Fort Hall, Idaho, and is a member of The Shoshone-Bannock Tribes. Join the discussion about austerity. A new Facebook page has been set up at:
https://www.facebook.com/IndianCountryAusterity

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