Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.
February 22, 2013 at 10:07 AM
Sequester and the economy
Where to begin on the sequester? The $85 billion in automatic, across-the-board federal budget cuts set to kick in on March 1 are an entirely artificial crisis manufactured by the Congress, specifically the Tea Party-dominated House of Representatives. The deficit and debt are not the biggest economic problem facing the country. Not by a long shot: There’s persistent high unemployment, slow growth, lack of investment in 21st century infrastructure, bad trade deals, inadequate tax revenues and the hollowing out of the middle-class by an oligarchy that has gamed the system to its advantage. Inflation remains tame. Interest rates are at historic lows. So there’s no evidence — none — that the deficit and debt (which are coming down, by the way) are hurting the economy.
The sequester, on the other hand, has the potential to shock a slow economy back into recession. The slow recovery is already partly the result of federal austerity. These cuts will do even more damage. Austerity is not working in Europe. It won’t work here. To be sure, we need to make the transition from Military Keynesianism to a peacetime economy and invest in America rather than in blowing things up and making more enemies overseas. We need to get control of health costs, which are the long-term threat to the budget. But the House, whose red-state members are in districts that are almost entirely net takers from the taxpayer, seems disinclined to back away from the brink. What do you think? You can make multiple answers.
Read on for the best links of the week and the haiku:
This Week’s Links:
- The end of growth wouldn’t be the end of capitalism | The Atlantic
- Jobless danger for wages | Stumbling and Mumbling
- How Obama moved the tax debate to the right | Ezra Klein
- Chief of embattled Boeing steers clear of the spotlight | Wall Street Journal (paywall)
- Sequester of fools | Paul Krugman
- Amazon outpaces Apple as ‘most reputable’ company in America | Slate
- MUST READ: Why medical bills are killing us | Time
- Foxconn stops hiring workers in China | The Guardian
- The Justice Department’s new get-tough policy is, well, not | Matt Taibbi
- Kicking Corzine out of the ‘club’ may not be so easy | NY Times
- D.C.’s quest to silence Elizabeth Warren | Salon
Today’s Econ Haiku:
The payroll tax pinch
Avoids a more painful truth
Wages being squeezed