Obama Attacked His Own Sequester Plan

On Tuesday February 18^th, standing in front of several rows of police officers and other emergency responders, being used as props, Obama blamed the Republicans for a long list of terrible things that will happen if Obama’s own sequester plan goes through, including police, teachers, firefighters, TSA and air traffic controllers being laid off and criminals being set free.  But there are several problems with Obama’s political theater.  First, the sequester was his idea in the first place.  Second, police, teachers, firefighters, and other first responders are on local municipal, county and state budgets, and are not part of the sequester.  Furthermore, Mary Schiavo, a former Inspector General of the US Department of Transportation at the time of the Clinton government shutdowns, stated that air traffic controllers, TSA and other federal first responders are exempt from government shutdowns, and that maintenance and repairs are paid out of a prefunded Repair Trust Fund and will not be affected by the sequester either.

Many commentators have pointed out that the $85 billion sequester for this year is only 2.3% of total federal government spending out of a $3.6 trillion budget, and the ten-year $1.2 trillion in proposed cuts out of a projected ten-year spending budget of $47.2 trillion is less than 0.3%.  These alleged “cuts” are actually reductions in the proposed rate of increase and are not actually cuts in the amount of spending.  If the Obama administration cannot find such small amounts of low priority items to reduce or cut back on the rate of increase, they are incompetent. Furthermore, since the sequester is a reduction in the rate of increase of government spending, there should not be a need for anyone to be laid off.  Clearly, Obama was just being a demagogue by telling people he would exact maximum pain by shutting down the most vital services, even ones he does not have control over, rather than cutting the lowest priority items and programs.  Obama has used this political trick before, including during the debt ceiling debate, and everyone should be used to it and call him out on it.

In fact, many people have called Obama out on his now worn out ploy and political theater, including Speaker John Boehner; Senators Tom Coburn, Lindsey Graham, and Rand Paul; as well as former Senator Jim DeMint.  In addition, Larry Kudlow, Karl Rove, Stan Druckenmiller, the hedge fund manager of Duquesne Capital, Mary Schiavo, former Inspector General of the US DOT, Sean Hannity, Rush Limbaugh, Rudy Giuliani, Ford O’Connell, Chairman of the Civic Forum PAC, Robert Woodward, an Associate Editor of the Washington Post, Harvard Business Professor Michael Porter and many others also criticized the President’s histrionics and various aspects of his political grandstanding.  But that didn’t stop Obama from repeating his lies on his Saturday radio address on February 23, 2013.

In an op-ed article in the Wall Street Journal (“WSJ”), Speaker John Boehner made clear that the $1.2 trillion sequester, due to kick in March 1^st, is the result of Obama’s failed leadership and blamed Obama for getting us into this mess in the first place.  Boehner wrote, “During the summer of 2011, as Washington worked toward a plan to reduce the deficit to allow for an increase in the federal debt limit, President Obama and I very nearly came to a historic agreement.  Unfortunately, our deal fell apart at the last minute when the president demanded an extra $400 billion in new tax revenue —50% more than we had shaken hands on just days before.”  “The President Is Raging Against a Budget Crisis He Created,” by John Boehner, WSJ, 2/20/13, p.A15.

In his op-ed article Boehner explained that, since the debt ceiling was looming, he immediately worked out an agreement with Senators Harry Reid and Mitch McConnell that called for immediate caps on discretionary spending to save $917 billion and form a super committee to find an additional $1.2 trillion in savings, and if the super committee failed to meet its target, the debt would not be raised when the ceiling would be hit again in a few more months.  But to insure his re-election, Obama scuttled this bipartisan, bicameral deal and, with the debt ceiling about to hit within hours, Obama forced his solution of the “sequester” on a reluctant Congress.  Id.  Boehner also pointed out that the House Republicans had passed two bills to replace the sequester with sensible alternative spending cuts, but Harry Reid has refused to even take them up in the Senate, and Obama has not made a sensible proposal.

Boehner also said that we should be cutting the budget by even more than the $1.2 trillion the sequester mandates.   Boehner further stated that, because of the way Obama demanded that the sequester be structured, “the sequester is an ugly and dangerous way to do it.  By law, the sequester focuses on the narrow portion of the budget that funds the operating accounts for federal agencies and departments, including the Department of Defense.  Exempt is most entitlement spending—the large portion of the budget that is driving the nation’s looming debt crisis.” Id.  “What Congress should do is replace it with other spending cuts that put America on the path to a balanced budget in 10 years, without threatening national security.”  Id.  Speaker Boehner went on to say that in the fiscal-cliff deal, “The president got his higher taxes-- $600 billion from higher earners, with no spending cuts….He also got higher taxes via ObamaCare.”  Id.  Boehner flatly stated that the American people “understand that the tax debate is now closed.”  Id.  Boehner summed up by saying, “Mr. President, we agree that your sequester is bad policy. What spending are you willing to cut to replace it?” Id.

Bob Woodward, an Associate Editor of the Washington Post, in an op-ed article in the Washington Post, basically confirmed Boehner’s version of the sequester.  Woodward wrote that the sequester was the idea of Jack Lew, now nominated for Secretary of the Treasury, and Obama approved the sequester.  Woodward confirmed that the reason Obama proposed that sequester was to get the debt ceiling moved past the election.  Bob Woodward, “Obama’s Sequester Deal-Changer,” The Washington Post.com, 2/22/13.  Moreover, Jay Carney, White House Press Secretary, confirmed that the sequester idea originated in the White House.

In an editorial, entitled “President Armageddon,” WSJ, 2/20/13,p.A14, The Wall Street Journal excoriated Obama for his “political tricks” and “his usual threat of Armageddon,” if Obama’s own sequester went through.  The Journal also said that “Americans can expect more such melodrama in the coming days.”  The Journal broke down Obama’s three biggest political tricks: (1) what it called “The Washington Monument ploy,” a parade of horribles that went on for several minutes, (2) the recession scare and (3) a tax increase disguised as “tax reform.”  As for the recession scare, the Journal reviewed some of the history of government spending cuts:

After World War II federal spending fell from 42% of GDP to 14.8% in two years, yet the private economy and employment roared back to life.  In the 1980s domestic [government] spending fell by about two percentage points of GDP and in the 1990s it fell by more than three.  Those were decades of government austerity but rapid growth in private output and wealth.  Mr. Obama has taken government spending from 21% to 24% of GDP, yet we’ve had the weakest economic recovery in three generations. Id.

 

The Journal could have continued the history by pointing out that in every one of the eight years of the Warren G. Harding and Calvin Coolidge Presidencies, they reduced tax rates a step at a time from the Wilson era top rate of 74% down to a top rate of 24%, cut government spending each year, and reduced the national debt.  The results were spectacular: the economy boomed, production of everything from cars to refrigerators to radios to airplanes expanded and unemployment was a low 3.6%.  Furthermore, when John F. Kennedy cut taxes 26% across the board, the economy also boomed in the 1960’s.  In addition, the Bush 2003 tax cuts kicked off a five-year boom.  That boom only ended when the Carter/Clinton “Community Reinvestment Act” and Clinton’s levering up Fannie and Freddie, together with Clinton’s increased subprime lending requirements for Fannie and Freddie, caused the inevitable busting of the housing bubble and brought the economy down.

The Journal concluded by stating, if Obama “won’t drop his tax increase and negotiate in good faith, as he hasn’t during his Presidency, then the sequester is the only way that any spending is going to be cut. The economy will be better for it.” Id.

Senator Rand Paul summed up the President’s histrionics in front of the police and firemen this way:

I would say balderdash.  It’s untrue, unfair, dishonest, disingenuous.  The President is making stuff up.  He put law enforcement--he put firemen and policemen, who, 98% of them, are being paid for with your local taxes, and says, you’re going to lose your local policemen, because of this.  It’s not true.  The sequester is a slowdown in the rate of growth of government.  It’s the least we can do.  Our country is drowning in a sea of debt, borrowing $50,000 a second.  We have to slow down spending.  And for the President to use this histrionics is really, I think, beneath the office of the Presidency.  “Happening Now,” Fox News Channel, 2/22/13.

Whenever the progressive, Keynesian policies of tax and spend have been applied they have failed, and the economy, taxpayers and debt levels have suffered.  These policies failed for (1) Wilson, who increased government agencies and spending dramatically, increased the income tax rate from zero to 74%, resulting in  the depression of 1918-19; (2) Hoover, who, together with signing the Smoot-Hawley Tariff, increased taxes, spending and started new government agencies, leading to the depression of 1929-33; (3) Franklin Roosevelt, who put Hoover’s programs of increasing taxes, spending and starting new government agencies on steroids, turning the Hoover depression into the Great Depression with high unemployment continuing for years, often above 20%; and (4) Barrack Obama, who expanded government agencies, increased government spending by over a trillion dollars a year, increased the National debt by some $6 trillion in four years, producing the weakest recovery since FDR and has given us a 14+% unemployment rate by the Labor Department U-6 rate, which includes those who are underemployed and those who gave up looking for work.

We should learn from FDR’s Secretary of the Treasury Henry Morgenthau, who in April 1939 with unemployment at 20.7% said, “[W]e have tried spending money.  We are spending more than we have ever spent before and it does not work…. I say after eight years of this Administration we have just as much unemployment as when we started…. And an enormous debt to boot!”