Posts Tagged ‘government deficit’

Is the Obama Administration Scaring Americans to Debt? – The Sequester

February 28th, 2013 Comments off

09.27.2013 removed broken live-graphic

Barack Obama has criticized congressional Republicans for creating a 'manufactured crisis' even though it was Mr. Obama and his Administration who asked for the sequester, and signed it into law under the Budget Control Act of 2011 (Image Credit: Alex Wong/Getty Images)

Barack Obama criticized Republicans for creating a “manufactured crisis” even though it was Mr. Obama and his Administration who asked for the Sequester, and signed it into law under the Budget Control Act of 2011 (Image Credit: Alex Wong/Getty Images)

Is the Obama Administration Scaring Americans to Debt? – The Sequester

original article written by Net Advisor

WASHINGTON, DC. There is much debate about the fiscal impact of the Sequester (formally called the Fiscal Cliff). People need to keep in mind that President Obama agreed to a “sequester” (to delay) some trivial budget cuts of about $85 billion this year, and $1.2 Trillion over 10 years or $120 Billion a year. These cuts are scheduled to begin March 1, 2013. Note: entitlements such as Social Security, Medicare, welfare, are NOT affected either way.

[1] The Sequester Obama Asked for, Agreed to, Signed, Now Blames Republicans?
On August 2, 2011, President Obama signed The Budget Control Act of 2011 (BCA) which created “Congressional Joint Select Committee on Deficit Reduction (sometimes called the “super committee”), options for a balanced budget amendment and automatic budget sequestration.” The Bill was introduced by Sen. Thomas Harkin (D-IA) on February 16, 2011.

Since then, there has been no balanced budget in 2011, 2012 and none to date. In fact, the Democratic controlled Senate has not passed a budget since April 29, 2009

[2] How to Delay Budget Cuts: Pass Another Bill
To delay the 2011 automatic spending cuts, on January 2, 2013 President Obama approved and signed the American Taxpayer Relief Act of 2012 (ATRA). The ATRA gave a temporary fix to what was called the Fiscal Cliff problem. This became the Sequester as we now are calling it. Again, keep in mind that in 2011, President Obama and Congress together agreed to to cut specific dollars of government spending under the Budget Control Act.

[3] Higher Taxes on Everyone
Under ATRA, Mr. Obama got his wish for higher taxes on the “wealthy.” However, many people ignored the fact that President Obama did not argue for lower taxes on the Middle-Class. As a result under ATRA the Obama Administration raised taxes on some 163 million Middle-Class Americans.

Obama seems to make people think he is for the Middle-Class. Somehow that doesn’t seem to explain why Middle-class taxes went up January 1, 2013.

The ATRA also kept the 2001 Bush Tax Cuts permanent for everyone earning under $400,000 per year. The word, “permanent” in Washington DC means until another Bill is passed to change this. The ATRA is expected to increase the deficit by $4 Trillion, even after factoring in higher taxes on the “wealthy” and Middle-Class.

Government had about a year-and-a-half to come up with a balanced budget, or at least a deficit solution. If nothing was done, these automatic ($85 Billion) in spending cuts will go into effect March 1, 2013. Now we know how we actuality got here.

[4] Democrats: What law? Oh, We Were Just Kidding!
The Obama Administration is trying to re-frame the sequester agreement. Now the Obama Administration and company are admitting they were never serious about the budget cuts in the first place.

“The sequester was never intended to be policy…(it)…was meant to force Congress to act to further reduce the deficit in a balanced way,” a White House official said.

— Source: NBC News PDF

What do they mean, it was never meant to be policy? It was a Bill signed into law. What part of ‘signed into law’ are they missing? House Speaker John Boehner came back and said:

“President Obama first proposed the sequester and insisted it become law. Republicans have twice voted to replace these arbitrary cuts with common-sense cuts and reforms that protect our national defense.”

— Source: NBC News PDF

[5] Chicken Little
The Obama Administration has been painting a picture for the media of gloom and doom if the government actually goes through with what they agreed to in 2011 – cut a little spending.

Keep in mind that the Administration doesn’t have to cut police, firefighters, or teachers. These are state paid workers, not federal paid workers.

U.S. Immigration and Customs Enforcement is the principal investigative arm of the U.S. Department of Homeland Security (DHS) and the second largest investigative agency in the federal government (Source: Image Credit: NYT)

U.S. Immigration and Customs Enforcement (ICE) is the principal investigative arm of the U.S. Department of Homeland Security (DHS) and the second largest investigative agency in the federal government (Source: Image Credit: NYT)

[6] Obama Not Serious About Border Security Either?
The Obama Administration doesn’t have to cut Border Patrol officer’s over-time pay either. The Obama Administration via ICE decided to allow the release of an unknown number of illegal aliens held in custody. They released them back into the U.S. population, instead of deportation. We do not know if they were detained for crimes or just entering the U.S. illegally. House Speaker John Boener called this “outrageous” (PDF).

Mr. Obama has talked about a “path to citizenship” aka Amnesty for the some 20 million illegal aliens in the USA. So the first step is to punish Border Patrol officers by cutting their pay, then release an unknown number of people with unknown criminal records back into the U.S. population unchecked, and this is the Republicans fault?

Keep in mind that the Republicans don’t run Border Patrol or ICE. The Obama Administration is in charge of these agencies under Homeland Security.


political cartoon by John Cole

[7] How to Govern the People: Fear?
The Obama Administration is trying to pin the fears of Americans of impending disaster instead of getting serious about the wasteful pork barrel spending, actually balancing a budget, or having a real plan to stop the deficit bleeding, all of which is not being addressed at all.

Now the time has come for the Obama Administration to deal with his spending problems. Mr. Obama has said, “we’ve got to do some governing.” Instead of facing this reality, working with Congress or seeking a balanced budget, Mr. Obama’s view of “governing” based on his actions is hitting the campaign trail pleading his doomsday scenario of why government can’t cut any spending.

Mr. Obama and company are out painting a picture of Chicken Little. If we make any budget cuts, then the economy will run into a new recession, massive layoffs will occur, “373,000 people diagnosed with mental health problems would lose services,” and there will be food shortages in America.

I’ve read a number of articles from CNN which had a page dedicated to doom and gloom if we cut any government spending. Once article cites FED Chair Ben Bernanke and a no referenced CBO report who seem to be under the false impression that cutting $85 Billion in government spending this year will someone translate to 750,000 lost jobs (Source: CNN PDF).

If this were true, that means the 750,000 people working are making an average wage of $113,333.33 a year [Math: $85 Billion budget cuts divided into 750,000 = $113,333.33 average salary per worker]. I just don’t buy into this argument. If anyone would like to list the specific workers and their documented salaries that would be out of a job as a direct result of government cutting $85 Billion from the $3.803 Trillion “budget” this year – please have at it and we’ll include that in an updated report.

[8] Maxine Waters: “Over 170 Million Jobs Could Be Lost” Due To Sequestration?
Maxine Waters (D) represents the 43rd district of Los Angeles, CA. She has been in public office for 20 years. Today she said that “over 170 million jobs could be lost” due to sequestration. The only problem with her statement is that it is completely false.

According to the Department of Labor’s February 28, 2013 statistics, the total number of people in the U.S. workforce ages 16 and over is about 156 Million (PDF).

So if government cuts $85 Billion from the budget (as agreed to in 2011), then EVERYONE in America will lose their job plus 14 Million other people who are not working yet will also lose their job?

Waters isn’t interested in balanced budgets, cutting government deficits or decrease government spending. She voted against the Budget Control Act of 2011.

[9] Government Trying to Put Fear into Women
Another Democrat is chanting scare tactics if we cut $85 Billion from the $3.803 Trillion 2013 budget. Rep. Donna Edwards (D-Maryland) said that women of domestic violence will be “forced to stay in their homes with their abuser” and “230,000 victims will be calling crisis hotlines and those calls will go unanswered” if such (unspecified) cuts are made, and this is all the Republicans fault? Nancy Pelosi (D-CA) was standing next to Edwards in orange suit (Link to video press conference).

Donna Edwards isn’t interested in balanced budgets, cutting government deficits or reduce government spending either. She voted against the Budget Control Act of 2011. Pelosi voted for the Budget Control Act of 2011, but it appears now she is against it.

[10] Journalist Allegedly Threatened by White House National Economic Council Chairman
Washington Post Journalist Bob Woodward said that he received an email from Gene Sperling, President Obama’s National Economic Council Chairman. The matter was discussed on CNN about Woodward’s reporting of the Sequester. The email apparently indicated that journalist Woodward would regret his reporting.

“During the CNN interview, Wolf Blitzer asked Woodward, “Share with our viewers what’s going on between you and the White House.”

Woodward responded, “Well, they’re not happy at all, and some people kind of, you know, said, look, we don’t see eye to eye on this. They never really said, though — afterwards, they’ve said that this is factually wrong, and they — and it was said to me in an e-mail by a top –.”

Blitzer interrupted, “What was said?”

Woodward answered, “It was said very clearly, you will regret doing this.”

— Source: CNS News

Chief Re-framer (White House Press Secretary James Carney), denied that the White House had threatened anyone. This hearsay comment by Carney seems to be ad odds of the written word.

These are just a few the apparent fear and scare tactics being used against those who oppose the Administration and any budget cuts. Even though the Left’s argument holds no water, they try and play on the fear of uninformed voters who blindly follow them like zombies (had to put our own 2 cents worth of controversy).

U.S. soldiers are stuck in sand in southern Afghanistan (Source: U.S. DOD Public Domain Image)

U.S. soldiers are stuck in sand in southern Afghanistan (Source: U.S. DOD Public Domain Image)

[11] Potential Budget Cut: $600 Million to Refurbish Hum-Vees
I found only one article CNN produced that named one guy who works for the government refurbishing the gas-hogging Hum-Vees. The department may lose 400 of its 4000 workers due to budget cuts. The funny part is he allegedly earns $47,000 a year – less than half of the average wage claimed by such cuts [Point #7, last paragraph above video].

If we are really leaving Afghanistan in 2014 and supposedly not in Iraq, do we need to keep spending $600 Million+ (a year?) on refurbished Hum-vees? Keep in mind, that $600 Million is the part that is potentially being cut. CNN did not report how much taxpayers are really spending on refurbishing Humm-vees.

Wouldn’t it be cheaper to buy a new Hum-vee than spend all this money refurbishing them when you factor about $47,000 per person, per year in labor costs; plus health-care costs, plus government pension, tools, plants, equipment, etc? The Obama Administration has pushed toward using air attack and surveillance with drones. Does refurbishing Hum-vees make sense?

[12] Who us? Oh no, we’re not using “scare tactics.” It’s more like, Warning “Flares”
Despite the facts in their own words above, the Obama Administration denies they are using “scare tactics;” instead they claim to be using warning “flairs.”

“Transportation Secretary Ray LaHood…pushed back on the notion that the Obama administration is using scare tactics to highlight the impacts of sequestration, saying instead that they are issuing warning “flares”.”

— Source: Politico, 02-23-2013 (PDF) (more liberal words and phrases)

Does this sound like warning “flares” to you?

“There’s no reason that the jobs of thousands of Americans who work in national security or education or clean energy, not to mention the growth of the entire economy, should be put in jeopardy just because folks in Washington couldn’t come together to eliminate a few special interest tax loopholes or government programs that we agree need some reform…”

— Barack Obama, 02-05-2013. Source: (formally MS-NBC)

Now, did the President just say “the ENTIRE economy” could be in “jeopardy” if we cut $85 Billion of government spending out of $3.803 Trillion in new spending? Really? That’s not a scare tactic?

House Plan vs. President Obama's Plan. Budget Comparisons based on 2013's numbers. Source: House Budget Committee (Document link: 6)

House Plan vs. President Obama’s Plan. Budget Comparisons based on 2013’s numbers. Source: House Budget Committee (Document link: (page 6)

[13] Trillions in U.S. Government Spending Isn’t Creating Utopia
The U.S. government has spent $5.9 Trillion of debt in the last four years. This amount is on top of tax revenues already taken in and yet, the U.S. economy still fell behind Mexico in 2012.

Mexico’s government doesn’t have this kind of money and managed to grow faster than the U.S. This is also true for every-single other country in the world. No other country spent anywhere near like the U.S. and all this spending has not created economic growth in America (Report).

[14] Did Obama Tell You He Wants to Spend $3.803 Trillion in 2013?
The President seems to be under the impression that if you take away $85 Billion (sequester budget cuts) from the $3.803 Billion Obama wants to spend, then the economy would be at risk? Obama’s own 2013 Budget also creates $901 Billion deficit just this year [Source: Executive Office of the President, OMB, page 205 Table S-1. Budget Totals (link only / PDF (256 pps total)].

In fact, Obama’s own budget-forecasts sees nothing but deficits forever. We’ll, OK, maybe not “forever,” but he only did a budget forecast until 2022 which would put the total deficit somewhere around $25 Trillion.

Mr. Obama’s proposes include more taxes and more government spending. This is nothing new since 2009 when Mr. Obama first came to office.

Mr. Obama and the Administration has no plans to cut one dime from the deficit. Mr. Obama stated at the 2013 SOTU address,

Let me repeat – nothing I’m proposing tonight should increase our deficit by a single dime. It’s not a bigger government we need…”

— Barack Obama said at the 2013 State of the Union Address

It was less than a month earlier that the President made his 2013 “budget.” The President’s “budget” creates another $1.22 Trillion (deficit).

Journalist Peter Morici at UPI put it this way:

“Obama talks like President Harry Truman but taxes like King George III.”

— Peter Morici, UPI (02-28-2013) (PDF)

[15] Spending $4 Trillion on Wars Failed to Heed Basic History Lessons
The thinking is that if we just spend more money on a problem, that will solve the problem? That ideology hasn’t worked in the U.S. economy, nor has it worked fighting wars.

Since 9-11-2011, the United States spent nearly $4 Trillion fighting wars (mostly) in the Middle-East, and 225,000 people have been killed in the process [Report, Point 5].

The solution now is to “draw-down” the wars. Translating “draw-down” into English means this: Realizing that counties who have far less weapons, money, and manpower made Obama give up. This is the exact same outcome both Great Britain and the former Soviet Union learned when they thought they could control Afghanistan. Our report discussed this exact same notion back on July 23, 2013 (Report).

Throwing money didn’t solve the problems in the Middle-East, and arming Egypt won’t solve them either.

[16] U.S. Economy Expected to Slow in 2013 Anyway
Regardless whether the Sequester happens, or more government spending happens, the IMF is projecting the U.S. economy to slow in 2013 anyway (Report with charts). The IMF projects that the U.S. economy will turn around right before the 2014 mid-term elections.

Coincidentally, President Obama is planning to increase government spending right before the 2014 election by an additional $80 Billion based on his 2013 budget forecast for 2014 [Source: Executive Office of the President, OMB, page 205 Table S-1. Budget Totals (link only / PDF (256 pps total)].

The only problem with the IMF 2014 growth projection of a 3% increase in GDP for the U.S. is that the U.S. economy would have to grow by 50% based on a 2013 growth rate of 2% [Math: 3% – 2% = 1%; then 1 divided by 2 = .05, (a 1/2) or 50% over 2013’s growth projection].

[17] I’m the President. I Don’t Want Responsibility:
Senate Looking to Grant Obama 100% Control and Authority to Cut $85 Billion in Spending. Obama Threatens to Veto

The Associated Press reported (PDF) that the U.S. Senate is looking to grant President Obama 100% control and authority of what programs to cut out of the $85 Billion Sequester.

Normally, one would think that the president would want more government control. But Obama doesn’t want any responsibility of making the hard choices even at his full discretion of how to reduce the deficit even by a little bit ($85 Billion). Instead President Obama has threatened to veto the Senate Bill.

In January 2013, Mr. Obama told Congress that if they just give him the authority, he would raise the debt ceiling. Now aside from the fact that this would be a very dangerous move Constitutionally. It would give unlimited spending powers to the Executive Branch (the President), that the Constitution explicitly grants exclusively to the House of Representatives.

“All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with amendments as on other Bills.”

Article 1, Section 7, of the United States Constitution (1787)

Hypothetically, even if the House granted the President the authority to increase debt as he sees fit, Mr. Obama does not want to cut any government spending at all. Draw this thinking out and one can see how Mr. Obama has spent twice as fast as Bush in half the time, racking up $5.9 Trillion in debt in his first four years in office.

In 2009, Mr. Obama promised to ‘cut the deficit in half.’

[18] Here is your $85 Billion
To help people further understand how bogus the Obama’s Administration’s gloom and doom disaster argument is, I found this. The $85 Billion in (sequester) budget cuts just so happens to equal the same amount of new tax revenues from the “Wealthy,” Middle-Class and via other means that went into effect January 1, 2013.

“In January (2013), the president just got more than $85 billion in new taxes on the wealthy, higher payroll taxes for everyone and an assortment of new levies on incomes, health insurance and medical devices through Obamacare.”

— Source: United Press International (UPI) (PDF)

In other words, the government doesn’t need new taxes, nor will it have to even raise the debt ceiling based on this Sequester event. Therefore, any cuts in services or personnel will be done under the guidance and command of the Executive Branch (Mr. Obama), no one else.

After the Sequester is resolved or not, the Debt Ceiling will be the next debate. I put the odds at a 100% chance that the U.S. government will raise the debt ceiling this year. One of the big questions remain: Are we going to have a real budget this year as Congress voted for, that the President agreed to and signed into law under the Budget Control Act of 2011?


If you liked this article, we appreciate liking us on Facebook or sharing on Twitter or your favorite social network. We are a non-profit org. Thank you!

Short link to this article:
Filed under U.S. Government Policy/Economy and posted to our Deficit Article Archive

images, graphics, video may be copyright of their respective owner where noted, or if known.

original content copyright © 2012® All Rights Reserved.® is a non-profit organization providing public education and analysis primarily on the U.S. financial markets, personal finance and analysis with a transparent look into U.S. public policy. We also perform and report on financial investigations to help protect the public interest. Read More.

Categories: Economy