Framing the Dialogue

Sé Questor

chicken littleNow that we’re into Day 2 of the Apocalypse AKA The Sequester Americans seem to be responding with a healthy ho hum.  While I live in Western Pennsylvania where the sun rarely comes out in the winter, but it’s light out so I have faith that it is out there somewhere.  The world did not end.  It is still early and  Chicken Little who lives in the White House is still running around screeching that the sky is falling.  Don’t get me wrong as I have no doubt that he will do his best to make the sky fall, but so far he has been ineffectual.  Even the New York Times called him on his scam.  That has to be a bitter pill to swallow when one of your friendly media outlets calls you out.  Ouch!

How do we put the sequester into perspective?  One way to look at liberal talking points is to look at what they aren’t saying.  Obama and his minions are hammering away about the amount of the sequester, roughly 85 billion dollars, while skillfully avoiding the percentage of the cuts.  85 billion dollars is a lot, but not when you look at the overall “budget” and I use the term “budget” loosely since the Democrat-controlled Senate has not passed a budget since Obama has been in office.   Harry Reid should be impeached for not doing his constitutional duty, but that is fodder for another post.  The sequester cuts amount to around a 2 percent budget cut.  Do you have any notion why Obama might want to downplay that number?  A quick glance at my finances and I have taken a much larger hit since January 1st between just the Social Security tax hike and the skyrocketing price of gasoline.

The most important part avoided in the discussions is that unlike my lower cash flow the sequester doesn’t even cut spending!  It just cuts the rate of growth, but there is still an overall increase in government spending.  There is one caveat that I need to mention in the interest of full disclosure.  The 2 percent cuts in the increase in spending will have to be taken over the remaining fiscal year so they will be deeper when spread over a shorter time period.  That pain is the fault of the agencies as Obama’s sequester was signed by him in 2011 and in plenty of time to budget responsibly.

CTOne thing I notice is that when I talk about economics and budgets to most people it doesn’t take very long for them to mind-wander to more pleasant pastures.  Hence the low information voter and the fix our country is in.  I heard one of the best examples to explain sequester this morning on the radio.  I missed the first part of the sound bite, but it sounded like Mayor Guiliani speaking and it went something like this;

Imagine an employee who makes $100,000 per year.  He is told by his boss that he could expect a 7 percent raise next year which would bring him to $107,000.  As the time approaches for the salary increase he is called in the office and told that after looking at the budget he now would only be getting a 5 percent raise since the company had to cut 2 percent.  He still gets a raise, but just not as much.  So rather than a salary increase of $,7,000 he’ll “only” get $5,000.

That’s sequester!  The agencies still get a raise (baseline budgeting), just not as much.

So why is Obama channeling Chicken Little?  The Heritage Foundation’s Jim DeMint has an interesting take on this:

“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—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. Over 10 years, Obama’s tax hikes will suck $2.9 trillion out of the economy.”

This explanation does make sense as the sequestration promises to have minimal impact while the Obama economy is flailing.  Before the economy can recover in spite of Obama’s policies he is driving us back down into a recession.  I do believe that Obama is playing chess while elected Republicans are playing checkers.

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