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Morning Bell: Obama's Sequester Smokescreen

Posted By Jim DeMint On March 1, 2013 @ 5:30 am In Economics | Comments Disabled

Suppose you desperately needed to lose weight but had a Big Mac with fries and a Coke staring you in the face. You could take your need to diet seriously and say, “No thanks, I’ll have a salad.” Or you could decide to reduce the Big Mac meal by 2 percent—pushing aside a couple French fries and gobbling up the rest.

If you took Option B, how do you think that “diet” would work out for you? Well, that, my friends, is the tale of the sequester that hit us this morning.

For the past few days the White House, with a big assist from sympathetic media, has done all within its considerable powers to make it seem like sequestration [1] means the end of the world. If all you’ve heard is their side, you might be forgiven for thinking that the Mayans were right after all—just off by a couple of months on their prediction of the apocalypse.

This political panic needs a little common sense. In the last decade, federal spending has exploded from a $2 trillion budget in 2002 to a $3.5 trillion budget in 2012—a 75 percent increase. Over the next 10 years, the budget is projected to grow another 69 percent to $6 trillion. The sequester barely taps the brakes on this runaway spending, still allowing a 67 percent increase over the next 10 years. Too much to ask of Washington?

“Sequester” is an awkward word for automatic spending reductions that were decided during negotiations for the 2011 debt ceiling deal, and it is problematic. The reductions leave the largest part of federal spending—entitlements—virtually untouched while deeply cutting into defense priorities. This compromises national security by undermining military readiness [1] and capabilities, while doing nothing to make defense more efficient and effective. This is a poor substitute for real budgeting. The President and Congress have had a year and a half to come up with a smarter way to reduce spending, and they have failed.

But you must remember that we live in a world where Harry Reid’s Senate has not passed a budget in 1,402 days. The sequester is a symptom of Washington’s fiscal cluelessness.

Yet, recall why we are having this conversation in the first place. We’re facing a serious debt crisis that has already led to America’s credit rating being downgraded. It is driven by these massive spending increases—resulting in even more debt—which, if left unresolved, will cripple our children’s future with higher interest rates, inflation, and even fewer jobs. It’s time to put our nation on the path to a balanced budget within the next 10 years.

So why is President Obama leading a scare campaign filled with untruths about how sequestration will necessitate firing firefighters, cops, and teachers?

I’ll tell you why. Because liberals know the Obama tax hikes forced through in January will really hurt the economy. It’s preemptive damage control. The President is trying to blame the sequester for the economic problems his tax hikes will spawn.

But our struggling economy is the President’s own creation. His tax hikes [2]—in income taxes, payroll taxes, and Obamacare taxes—will take $150 billion out of the economy this year alone. The $150 billion doesn’t magically appear in Washington’s bank account without real consequences. It comes out of your paycheck. It means less money for your boss to give you a raise. Small businesses won’t have the money to hire new employees. You’ll have less money to save for your retirement or your child’s college fund.

The impact of the tax hikes on the economy is nearly twice as big as the impact of sequestration [3]. Over 10 years, Obama’s tax hikes will suck $2.9 trillion out of the economy.

Excess taxation hurts working families, but cutting government spending helps spur jobs and economic growth. As Heritage economist J.D. Foster has explained [4], reducing the rate of spending growth “may even provide a modest short-term lift while improving the economy’s performance in future years.”

Washington has a problem with spending and debt. It needs immediate action. A paper [5] by Heritage researcher Romina Boccia pointed out just last month that U.S. publicly held debt, not even counting state and local government debt, will exceed 76 percent of GDP this year, and chronic deficits are projected to push U.S. debt to 87 percent of the economy in 10 years. Recent economic research confirms that “federal debt at such high levels puts the United States at risk for a number of harmful economic consequences, including slower economic growth, a weakened ability to respond to unexpected challenges, and quite possibly a debt-driven financial crisis.”

These are the real consequences of Obamanomics. The President’s spending spree is the real problem. His trillion-dollar deficits mean that we can’t just skip a couple of fries—we have to put government on a true spending diet. Our children’s future is too important to wait any longer.

Find out how you can get involved in the fight to put government on a spending diet [6].

Former Senator Jim DeMint is president-elect of The Heritage Foundation.

Read the Morning Bell and more en español every day at Heritage Libertad [7].

Quick Hits:

  • Vice President Joe Biden says because of sequestration, he will stop flying so much [8] and go back to taking Amtrak trains.
  • Benedict is no longer the pope [9]. He has retired to the papal palace for two months and then will return to the Vatican to live quietly.
  • The federal employees’ union [10] is threatening to fight any furloughs due to sequestration—which would miss the whole point of the spending reductions, reports the New York Post.
  • President Obama’s political group, Organizing for Action [11], used discredited information to lobby against sequestration spending reductions.
  • Does U.S. debt matter to young people? Yes! Listen to what they have to say [12].

Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2013/03/01/obama-spending-taxes-sequestration-obamanomics/

URLs in this post:

[1] sequestration: http://www.heritage.org/federalbudget/budget-control-act

[2] tax hikes: http://blog.heritage.org/2013/01/08/tax-changes-2013/

[3] impact of sequestration: http://blog.heritage.org../../../../../2013/02/26/chart-obama-2013-tax-increase-twice-as-large-as-looming-sequestration/

[4] explained: http://www.heritage.org/research/reports/2013/02/budget-cuts-would-not-harm-the-economy

[5] paper: http://www.heritage.org/research/reports/2013/02/how-the-united-states-high-debt-will-weaken-the-economy-and-hurt-americans

[6] Find out how you can get involved in the fight to put government on a spending diet: http://www.myheritage.org/campaign/030113-sequester-morningbell/

[7] Heritage Libertad: http://libertad.org/

[8] stop flying so much: http://www.foxnews.com/politics/2013/02/28/sequester-railroads-bidens-pricey-plane-travel/

[9] no longer the pope: http://hosted.ap.org/dynamic/stories/E/EU_VATICAN_POPE?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2013-02-28-11-16-44

[10] federal employees’ union: http://www.nypost.com/p/news/national/fed_unions_vow_we_ll_get_payback_vrI77j4hqrGAHaDmcZNFjK

[11] Organizing for Action: http://blog.heritage.org../../../../../2013/02/28/organizing-for-action-uses-discredited-information-on-sequester/

[12] Listen to what they have to say: http://blog.heritage.org../../../../../2013/02/28/millennials-how-the-debt-impacts-us-video/

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