Debt Wish: The Culprit

| February 1 2013

Debt Wish: The Culprit

Yesterday, the White House pointed to the looming across-the-board spending cuts (known as the sequester) as the culprit for the drop in GDP, but the truth is Washington has no one to blame but themselves.  We’ve known about the sequester for more than a year, and instead of finding offsetting cuts, we’re seeing a relentless push for higher taxes.  The lesson from the drop in GDP is how dangerously dependent our economy has become on spending that we know is unsustainable. Time to stop feeding the addiction.

WHITE HOUSE BLAMES LOOMING SEQUESTER FOR DROP IN GDP

On Reports GDP Shrank 0.1 Percent Last Quarter, The White House Points To The Sequester:

White House Blames Threat Of Sequestration For Contracting Economy. “White House press secretary Jay Carney laid the blame for a surprise economic contraction squarely at the feet of congressional Republicans Wednesday, saying economic threats during the ‘fiscal cliff’ negotiations had prevented important defense spending.” (Justin Sink, “White House: GOP responsible for contracting economy,” The Hill, 1/31/13)

White House Press Secretary Jay Carney And House Leader Nancy Pelosi Point To “Feet Dragging” Over Fiscal Crisis. “White House Press Secretary Jay Carney and House Democratic Leader Nancy Pelosi earlier alleged that GOP feet-dragging during talks over the fiscal crisis and willingness to accept automatic defense cuts contributed to the economic squeeze.” (“Republicans rip White House over finger pointing in wake of dismal GDP report,” Fox News, 1/30/13)

Carney: Right Course Is To Make Sure Sequester Doesn’t Happen. “‘… We believe that the right course of action is to take steps to make sure that sequester doesn’t happen because it’s bad for the economy and bad overall for the effort to reduce our deficits in a reasonable way,’ Carney said.” (Lisa Rein, “White House: Automatic cuts ‘not supported by virtually anyone in Washington’,” Washington Post, 1/28/13)

Flashback: White House First Proposed Sequestration. “The defense sequester was first proposed by White House officials to be so onerous as to force Republicans to agree to a deal to cut the deficit.” (Zeke Miller, “White House Blames GDP Drop On Republicans,” Buzzfeed, 1/30/13)

BUT SO FAR THERE HAS BEEN NO DISCUSSION OF SPENDING OFFSETS, JUST MORE TAX HIKES

No “Signs Of Urgency” From Washington To Avoid Sequester. “But I’m also not sure that we’re going to see a real effort to avoid sequestration. … I don’t see any signs of urgency to figure out an alternative.” —Todd Harrison, a defense budget analyst at the Center for Strategic and Budgetary Assessments (Jeremy Herb, “GOP hawks sound alarm on sequester,” The Hill, 1/30/13)

White House Has “No Specifics” To Offset Sequestration. “The White House has maintained that it wants to avoid the sequester. But when asked Monday on whether the president was planning specific meetings or events to address the topic, Carney said said he did not have ‘any specifics’ to provide.” (Justin Sink, “White House: GOP responsible for contracting economy,” The Hill, 1/30/13)

Spending Cuts Have Been “Barely Discussed.” “In public statements since [Obama’s] re-election, he has barely discussed how he would pare back federal spending, focusing instead on the aspect of his plan that plays to his liberal base and involves all gain and no pain for 98 percent of taxpayers.” (Peter Baker, “Obama Tilts Tax Debate Away From Spending Cuts,” New York Times, 11/29/12)

With Highest Federal Budget Deficit In Decades, Obama Has Focused Almost Entirely On Taxes. “As the president and Congress hurtle toward a reckoning on the highest federal budget deficit in generations, Mr. Obama says he wants a ‘balanced’ approach to restoring the nation’s fiscal order. But the high-profile public campaign he has been waging in recent days has focused almost entirely on the tax side of the equation, with scant talk about his priorities when it comes to curbing spending.” (Peter Baker, “Obama Tilts Tax Debate Away From Spending Cuts,” New York Times, 11/29/12)

Next Week Senate Democrats Will Consider More Tax Hikes (“Revenue-Generating Alternatives”):

Bloomberg: “Democrats Mull Revenue Offsets to Sequester, Reid Says.” “Senate Democrats will consider revenue-generating alternatives that could be used to offset automatic spending cuts set to take effect March 1, Majority Leader Harry Reid said today. Reid, a Nevada Democrat, said Democrats will view options at their policy retreat next week for limiting the automatic cuts, known as sequestration.” (Kathleen Hunter and Tony Capaccio, “Democrats Mull revenue Offset to Spending Cuts, Reid Says,” Bloomberg, 1/29/13)

EARLY FALL: INSTEAD OF PUSHING FOR SOLUTIONS, THE WHITE HOUSE ADVISED SIMPLY NOT TO PREPARE

Obama Administration Told Businesses Not To Issue Layoffs:

“Obama: Defense Sequester ‘Will Not Happen.’” (Lori Montgomery, “Obama: Defense sequester ‘will not happen,’” Washington Post, 10/22/12)

The White House Sent Letters To Defense Contractors Pressuring Them Not To Plan For The Fiscal Cliff. “The Obama administration issued new guidance intended for defense contractors … reiterating the administration’s position that the companies should not be issuing layoff notices over sequestration.” (Jeremy Herb, “Obama administration tells contractors again: Don’t issue layoff notices,” The Hill, 9/28/12)

The Labor Department Called Preparing For Sequestration “Inappropriate.”  “The Labor Department issued guidance in July saying it would be “inappropriate” for contractors to issue notices of potential layoffs tied to sequestration cuts.”  (Jeremy Herb, “Obama administration tells contractors again: Don’t issue layoff notices,” The Hill, 9/28/12)

DECEMBER: WHITE HOUSE DIRECTS PENTAGON TO PREPARE FOR SEQUESTER BUT PROVIDES NO ANSWERS

White House Directs Pentagon To Plan For Cuts. “The Pentagon said on Wednesday the White House budget office has directed it to begin planning how to implement billions of dollars in across-the-board spending reductions if Congress and the president fail to agree to avert the cuts before January 2.” (David Alexander, “After months of delay, Pentagon told to plan for ‘fiscal cliff’,” Reuters, 12/6/12)

No Answers Causing Concern For Federal Agencies. “‘We have persistently asked the agency, ‘What are the plans? Can you tell us the plans?’’ said Carolyn Federoff, a Boston-based attorney for the Department of Housing and Urban Development and an official with the American Federation of Government Employees. ‘They say, ‘Don’t worry about this, this is not going to be a problem,’’ Federoff said. ‘Truthfully, we have to be concerned.’” (Lisa Rein, “Agencies set up plans to manage cuts if Congress, Obama fail to reach deficit deal, Washington Post, 12/7/12) 

Sequestration Has Been “Pushed To The Side” In Washington. “[A]s a few observers predicted months ago, the potential plight of the Pentagon and its constituents isn’t even the main event as the year winds to a close. It’s been pushed to the side. Defense analyst Mackenzie Eaglen of the conservative American Enterprise Institute warned as far back as May that if Beltway denizens expected November’s election to deliver a decisive end to the battle over sequestration, they were sadly mistaken.” (Phillip Ewing, “Cuts looming, no answer in sight for sequestration,” POLITICO, 12/11/12)

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