We are about two weeks away from something called the sequester. This is a law passed by congress to ensure that congress balance the federal budget by threatening major indiscriminate deep cuts on all government programs across the board – including defense.
Photo Credit: White House/Pete Souza
Balancing the budget means that no more money is spent by the government than it takes in. If there is no action by congress along those lines the government can ‘borrow’ the money by raising the debt ceiling or by selling bonds to foreign governments like China. Meaning it can just print more money and ‘owe itself or China’ the money to pay be paid back with future revenue increasing our debt exponentially as we continue to have to ‘borrow’ to meet government expenditures because of an unbalanced budget.
Although I hope I’m wrong – it seems like the sequester will happen. That is not a good thing. There is no way of telling what the exact impact will be. But I don’t think it is rocket science to realize that when there are automatic deep budget cuts across the board to all government programs – including the military – not to mention entitlement programs like welfare, workfare, Social Security, Medicare, Medicaid, and farm subsidies; …that people will suffer.
No doubt food prices will increase; joblessness will increase; government revenue from taxes will decrease and taxes will increase to try and offset that; there will be less money for anyone to spend; consumer demand will decrease; production will decrease; more jobs will be lost; the market will crash; retirement funds heavily invested in the market will no longer be able to help support the elderly; social security will decrease; Medicare and Medicaid payments will decrease, the ill will suffer; our national defense will suffer; and who knows what else… In short it’s not a pretty picture, no matter how you paint it.
The fault lies with both the executive and legislative branches of government. Neither wants to budge from their ideological positions. Congressional Republicans will never agree to any deal that does not include a reduction in government spending. The President refuses any further cuts the budget which will surely increase the deficit. He feels obligated to protect entitlements to the wealthy and the poor.
The problem with his position is that if the government keeps printing money, it will become devalued. In a world based economy this will surely cause unprecedented inflation. We may end up with a simultaneous depression and inflation… who knows.
The President has thrown down the gauntlet. He says that if congress doesn’t act blame for the sequester will be their fault.
Perhaps. But history will not be kind to the President. If the worst happens, it will be under his watch. History will record that whatever catastrophic economic event happens under his watch will be his fault. And he may go down as the worst President in American history, despite his good intentions.
It is true that the public blames both sides but see the Republicans having greater fault I this. I see it as two stubborn sides that consider their own liberal or conservative principles having greater value that saving the country from financial ruin. I really don’t know what they are thinking.
But whatever the truth is about whose fault it is, history will record that the Obama Presidency will be the worst failure since that of Herbert Hoover.
Somebody better blink in this game of chicken. I don’t care who it is at this point. But if the President wants to have any kind of decent legacy he ought to make sure someone does.
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