We are heading down the path to the great sequester, which will be implemented on March 1st, unless some kind of deal is made where the Democrats and Republicans agree to another game of “kick the debt can” further down the road.
President Obama brought out his human props last week for a public display of fear mongering. When he’s not campaigning, this is one of his favorite things to do. Firemen, policemen, ambulance drivers, air traffic controllers; they were all there to put visions of civil apocalypse in our heads.
“We can’t cut our way to prosperity”!
That is the mantra of those on the left. They warn us against ‘draconian’ budget cuts and insist that “we don’t have a spending problem, we have a revenue problem”!
Not being an economist like Paul Krugman, this would seem to go against the simple economic lessons taught to me by my parents (they weren’t economists, either). My parents told me to live within my means. Not to spend more than I made. Put money away for a rainy day (and fixing the car. And fixing the wife’s car, too).
But here we are, after a deal was proposed by President Obama back in 2011,(an idea hatched by his OMB Director, Jack Lew) we are now faced with an automatic shaving of $85,000,000,000 from the total Federal working budget. These cuts are supposedly enough to rock our world and turn us all into ‘preppers’. Yet, our estimated total for Federal spending this year will be $3,800,000,000,000. That means that the ‘draconian’ cuts to the budget amount to less than 2% of our total spending. Not to mention that we running an annual deficit of $1.3 trillion dollars. You would think that cutting 85 billion would be peanuts. And necessary.
Here’s what really bugs me about this whole sequestration deal. I’m not even going to debate the supposed pain that this would create…the loss of programs and civil employees getting laid off, etc. That’s another debate for somebody else to tackle. My problem with this is how this compares to QE3, or Quantitative Easing, round 3.
We are currently printing money that we don’t have, every single month, and using this money to invest in the stock market and treasury bonds. This is the THIRD attempt by Ben Bernanke, Chairman of the Fed, to alter the economy by pumping it with new money (that we don’t have). Bernanke is trying to stimulate employment, prop up the stock market and increase inflation.
QE3 is another subject that I’m not here to argue the merits of. That’s another subject for someone who is a lot smarter about economics than me.
But how much money are we printing every month to buy treasury bonds from Goldman Sachs?
Does that number ring a bell? Yes. That’s the same amount of money that we are fretting over cutting from the budget..in a TEN YEAR PERIOD. That’s the same number that everyone in Washington is wringing their hands over and losing sleep thinking about. The same dollar amount that has the President trotting out his latest group of useful idiots to scare us into writing letters to John Boehner and asking him to “please compromise and save us”!
YET, Bernanke has the power to go ahead and print another 85 billion dollars every month until the unemployment level comes down or the inflation goes up.
And nobody pays any attention to it. Now, if the Fed didn’t print this money for two months, are we not ‘saving’ more money in two month’s time than we would in cutting 85 billion from the budget that won’t be realized for a full 10 year period? Does that not stand to reason?
Why is 85 billion in cuts (over 10 years) worth getting manic about, but printing 85 billion that we don’t have (every single month) not even worth a yawn?