The Sequester - Are we being hornswoggled?

[samclem]

What is more concerning is a lack of FY13 budget; the Continuing Resolution is quite binding and talk of a full year CR is a large concern.

Marc

Congress last passed a budget in April, 2009. Since that one expired we've been running on CR's. It's a national disgrace.

A budget resolution based on President Obama's 2013 budget failed to pass the Senate by a vote of 0-99.

So, apparently this is the new normal until there's a sufficient shock to the system to jar the present power structure into a new sense of where their priorities should be.

 

[Nodak]

Congress last passed a budget in April, 2009. Since that one expired we've been running on CR's. It's a national disgrace.

A budget resolution based on President Obama's 2013 budget failed to pass the Senate by a vote of 0-99.

So, apparently this is the new normal until there's a sufficient shock to the system to jar the present power structure into a new sense of where their priorities should be.

+1

 

[explanade]

Do people remember distinctions between long run and short run economic effects?

European nations, including the UK, went on austerity programs when economic growth was tepid at best. Now they're falling into recession.

UK isn't suppose to be as profligate as the PIIGS countries but they elected Cameron a couple of years ago to make across the board cuts, to improve their fiscal situation.

So GDP has fallen, unemployment is up, and the fiscal situation has deteriorated as tax receipts from weaker economy has fallen faster than the amount of spending cuts.

Cameron and Gordon Brown are deeply unpopular but they're continuing with austerity. Seems ideology trumps pragmatism or evidence of a theory being shown to be false.

 

[samclem]

Do people remember distinctions between long run and short run economic effects?

The argument for Keynesian-inspired government spending to spur US economic growth would be much stronger if the proponents had a track record of turning off the spigot when the economy was growing. They don't. And, to be fair, many of those who call themselves fiscal conservatives had a similarly profligate record when they held the levers.

An alcoholic shouldn't take "just a bit" to ward off the cold weather. That's about where we stand now.

The legislators who are screaming about these "terrible" cuts (and they are on both sides of the aisle) are only revealing that they have no stomach for the real work Congress needs to do. The "cuts" amount to less than 3% of projected 2013 federal spending.

Regarding UK "austerity": They passed tax increases (which have taken effect) and spending cuts (which have hardly started).
1) Should we be surprised that taking money out of the productive economy through taxation reduces economic growth?
2) Does this same path sound like any other countries we know?

"Austerity" isn't the problem.

 

[GrayHare]

If we can't find a way to survive on a couple % less $ than the prior year, there is no hope.

 

[pb4uski]

What I don't get is that the 30,000 foot level the sequester spending "cuts" seem quite benign and would only affect future budgets (Nodak's post).

OTOH, the noise that is being made seem to suggest that significant cuts will occur (martyb's post).

I can't connect the dots. My off-the-cuff is that the gloom and doom of government officials is smoke - they doth protest too much.

What am I missing?

Here's a Congressional Budget Office take on it.

It will mean an unpaid furlough and a 20% cut in pay for however long it lasts. We are being told to plan for 22 weeks with one day per week unpaid.

 

[explanade]

Regarding UK "austerity": They passed tax increases (which have taken effect) and spending cuts (which have hardly started).
1) Should we be surprised that taking money out of the productive economy through taxation reduces economic growth?
2) Does this same path sound like any other countries we know?

"Austerity" isn't the problem.

Do you have any cites for those claims, that they haven't cut anything over there?

Because there are a lot of interpretations like this one:

It's Official: Austerity Economics Doesn't Work : The New Yorker

 

[samclem]

Originally Posted by samclem
Regarding UK "austerity": They passed tax increases (which have taken effect) and spending cuts (which have hardly started).
1) Should we be surprised that taking money out of the productive economy through taxation reduces economic growth?
2) Does this same path sound like any other countries we know?

"Austerity" isn't the problem.

Do you have any cites for those claims, that they haven't cut anything over there?

Because there are a lot of interpretations like this one:

It's Official: Austerity Economics Doesn't Work : The New Yorker

Thanks for including what I wrote, as I didn't say "they haven't cut anything over there"

Regarding a reference: As it happens, Her Majesty's Government publishes the actual figures. They are here, (published by the Guardian), we needn't depend on The New Yorker's interpretation. Those huge austerity cuts amounted to real decreases of 1.58% between 2010/2011 (when they started) and 2011/2012. I think it's quite accurate to call these cuts small.

 

[Texas Proud]

If $24B of the easy stuff (per Simpson & Bowles) vs a goal of $4T over 10 years is progress to you, it's still kicking the can down the road IMO. But I'm hopeful they will make meaningful progress eventually too...

I only saw it as kicking the eventual implementation down the road... instead of what they usually do which is kick it down with NO cuts...

I agree... if they are having so many problems with $85 billion (which, BTW from what I heard to day is really on $44 billion for the rest of the year on the Sunday shows), there is no way to cut $4T....

Also, I think they need to cut $9T.... which will not happen anytime soon as only a few are talking about that drastic of cuts...

 

[Texas Proud]

Congress last passed a budget in April, 2009. Since that one expired we've been running on CR's. It's a national disgrace.

A budget resolution based on President Obama's 2013 budget failed to pass the Senate by a vote of 0-99.

So, apparently this is the new normal until there's a sufficient shock to the system to jar the present power structure into a new sense of where their priorities should be.

Actually the House has passed a budget... but the Senate has not...

This makes your stmt true, but I do not think it is directed at the right people....

 

[ls99]

The sequester. I find it ironic that the guy who signed it into law does the most whining about it.

 

[Alan]

That's all folks

Thanks to all who participated.