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Special Report
The Coming Sequester Lies
You thought Obama would stop at the ones he’s told already?
Almost a week since the dreaded sequester went into effect, and look out your window. To quote President Obama the day after Obamacare was passed, the sun is still shining, the birds are still chirping, and the earth is still spinning on its axis.
Of course, Obamacare still does not go into effect for another year now. But the sequester has already been in effect for five days. Unlike the sequester, when Obamacare goes into effect, it will kill people.
Everybody knows by now that President Obama was telling a lot of tall tales to stop the sequester from cutting even 1% of federal spending, not from current levels of spending, but from the increase in spending this year. That should make clear Democrat policy is to oppose any cut in federal spending.
But the sequester debate also clarified President Obama’s economic policy. If you listened carefully to what Obama was saying, you would see that Democrat economic policy holds that it is government spending that drives economic growth and prosperity. If that should sound nuts to you, that’s because it is. I don’t want to appear to make the notion sound respectable. But that is the reality that we have to deal with.
And we are not talking here about government infrastructure spending, national defense, or even education spending, all of which can have positive economic growth effects, when done right and effectively, education spending longer term, infrastructure and national defense more immediately. We are talking here about general government spending on everything, which is what the sequester was about.
What Obama and the Democrats were saying repeatedly during the sequester debate is that the government spending cuts would hurt the economy, but increasing taxes would not!
That is right, they said repeatedly the sequester spending cuts would hurt the economy today, but that could be avoided if we would follow their recommendations and increase taxes instead. In fact, the alternative Democrat sequester bill that barely failed in the Senate would have increased capital gains and dividends tax rates again, on top of the January increases from Obamacare and the expiration of the Bush tax cuts. America would then suffer with the fourth highest capital gains tax rate in the world, to go with Obama’s highest corporate tax rate in the world (except for the socialist one party state of Cameroon).
Yes, America is rapidly becoming the world’s leading socialist state. Everyone else, including former communist/socialist powers such as China, Russia, and India, are turning to the Reaganomics we here in America have so stupidly abandoned. If you want to move to Argentina, stay put. Argentina is coming to you. If you want a booming capitalist country following the policies of Reaganomics, move to formerly socialist Canada.
The Democrat-proposed further tax increases are not even good Keynesian economics. Even Keynesian economics says raising taxes hurts economic growth. Their explanation of that is all wrong, focusing on the reduction in so-called “aggregate demand,” rather than incentives. But at least the Keynesians got the policy right.
It is true that Keynesian economics supports the idea that increased government spending, deficits and debt is what sparks recovery and renewed economic growth. That is core Democrat policy, and what you are voting for every time you vote Democrat. But there is no more discredited idea in economic history (except for outright Marxism), both intellectually and in practice.
Keynesian support for increased government spending to boost the economy fails to consider that government has to get the money to spend from somewhere, either increased taxes, increased borrowing, or inflation. And all of that takes an equal amount out of the economy, leaving no net increase in demand. In fact, when the negative economic effects of the increased taxes, borrowing, or inflation are considered, the net result is a contractionary drag on the economy. That is why Keynesian economics has never worked. Obama’s nearly $1 trillion so-called “stimulus” in 2009 just proved that yet again.
Indeed, the entire Keynesian focus on “demand” is misconceived, because demand is insatiable, and can never be inadequate in a market economy. If demand for any good or service is insufficient for the supply, in a market economy the price of the good or service will just decline, until demand equals supply. Keynesian economics survives only because it supports what Democrats want to do, which is increase government spending, deficits, and debt. See, e.g., Paul Krugman.
The obscured truth that our very dumbed down country right now can’t get is that economic growth is the ultimate determinant of revenues, and deficits. Follow pro-growth policies, and you get booming revenues and disappearing deficits. But that is so yesterday for America, which thinks now with rapidly declining Europe that pro-growth policies are “unfair.” (What is fair about plummeting middle class incomes, soaring poverty, and persistent high unemployment?) This in the formerly richest, most prosperous nation in the history of the world. Good job, Progressives, you have your fundamental transformation of America (into Argentina).
The Coming Crash of 2013
I
have long been on record as predicting renewed, double dip
recession for 2013, just as happened during the depression. The
full story on that can be found in my short book published in 2011
by Encounter Books, Obama and the Crash of 2013, and my
long 2011 book published by HarperCollins, America’s Ticking
Bankruptcy Bomb.
That is because all of Obama’s policies are so anti-growth — increasing tax rates, especially on capital investment that is the foundation for jobs and rising wages, increasing regulation, easy money with a weak dollar, and increased government spending, deficits and debt.
About the Author
Peter Ferrara is Director of Entitlement and Budget Policy at the Heartland Institute, General Counsel of the American Civil Rights Union, Senior Fellow at the National Center for Policy Analysis, and Senior Policy Advisor on Entitlements and Budget Policy at the National Tax Limitation Foundation. He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under President George H.W. Bush.
Letter to the Editor View all comments (22) | Leave a comment
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Intelligent Design| 3.6.13 @ 7:57AM
Secretary of State Kerry announced Sunday that the U.S. is giving $250 million to the Muslim Brotherhood government of Egypt. This along with $1 billion in military jets Obama has already given his Muslim friends. Sequester???
It is widely known that the Muslim Brotherhood is the parent of the terrorist group Hamas, which is trying to kill Jews and destroy Israel. It is also true that the Muslim Brotherhood advocates full utilization of sharia law in Egypt (most Egyptians want it). It is also true that in February 2011 the Director of the FBI, Robert Mueller, told the House Permanent Select Committee on Intelligence that the Muslim Brotherhood supports terrorism. And we know that a key documented goal of the Muslim Brotherhood is "the destruction of Western civilization from within."
Giving cash and military assets to the Muslim Brotherhood government of Egypt is the same as giving aid to Muslim terrorists, with whom we are at war. Sequester???
TLP| 3.6.13 @ 10:28AM
You left out the 300 FREE Abrhams Tanks he gave Morsi, to go with those FREE F-16s.
But, don't worry.
He's the Best Friend Israel's ever had.
Just ask Chuckie Shylock Schumer.
Or, any other Democrat Jew Politician.
TLP| 3.6.13 @ 1:28PM
That should've read "Jewish", not "Jew".
Shalom.
mike 3/505| 3.6.13 @ 6:41PM
Salaam alaykum
Hardcard| 3.6.13 @ 8:24AM
Sequester ?? No treason. Obamao jdingo's pal chavez left this world without the 2 billion he stole from his people, a true collectivist, socialist, marxist, he collected from his people as much as he could lay his thieving paws on and redistributed it to his personal stash. How rich will our dear leader be when he takes a dirt nap? No sequester in Egypt. Keep looking upward to the sky, you could be next on the HIT PARADE, drone on, eric the red says it's okeydoaky for dear leader to terminate with malice, all of you unpatriotic right wing nuts who might not be happy about the theft of your freedom and wealth by dear leader and regime. What me worry? Hey you didn't build that !!!!
Sjccoach| 3.6.13 @ 9:12AM
More big government conservative nonsense from Mr.Ferrara. The federal government has no business in education. Federal government education spending does not have positive economic growth effects. It is money poured down a rat hole to fund the teacher's unions.
markenoff| 3.6.13 @ 7:46PM
It's not education it's indoctrination.
Von Mises Jr| 3.6.13 @ 9:48AM
The Republicans stand for nothing and they will continue to stand for nothing.
The CR and Debt Ceiling will be raised. If the economy tanks, the liberals will try to blame Bush, Boehner and McConnell and they may succeed.
But the loss of jobs due to ObamaCare and Dodd Frank cannot easily be blamed on the Republicans. And most of all, OBAMACARE BELONGS TO OBAMA.
If you haven't noticed, they now want to call it the "affordable Care Act." But it is not. It is OBAMACARE. And when people lose their coverage, premiums necessarily skyrocket, fines of 1% to 2.5% start to kick in 2014 and people's mother get a pill instead of a procedure; the liberals are going to have a hell of a time blaming OBAMACARE on the GOP.
They will try, but good luck with that.
Stephie| 3.6.13 @ 11:36AM
But Boehner still wants to fund the monstrosity. They have the ability to NOT fund it but willingly give barry what he wants.
Von Mises Jr| 3.6.13 @ 11:59AM
The OsamaCare Exchanges and Medicaid Expansion are not in the Budget. So if Boehner and McConnell fund it, then they are for it.
That confirms my theorem that the GOP prefers the Statist, socialist kabuki dance with the Democrats and is selling the conservatives and the Constitution down the river for their share of the power.
Watch what Boehner does, not what he says. If we haven't learned that from barry yet, we are fools.
Russel| 3.6.13 @ 10:04AM
Even a hardcore socialist liberal has a wallet , and they are quite stingy about its contents . Ya gotta howl with laughter when even dumb -as a-post Donna Brazille complains about O'Bummercare . The coming attractions can't obscure that fact . It's going to be a headliner , not more cuts . Mr. Boner , get up and yell to the American people these are NOT cuts , but a diminished increase .
Bob Grant| 3.6.13 @ 10:27AM
You sometimes wonder if republicans' incompetence/ineptitude is by design?
Santiago| 3.6.13 @ 10:41AM
"If you want a booming capitalist country following the policies of Reaganomics, move to formerly socialist Canada."
Or Singapore, or Chile, or New Zealand, or Switzerland, or Hong Kong..............even Colombia has made strides in reducing violent crime while increasing business freedoms in the last 15 years.
Al Adab| 3.6.13 @ 11:13AM
The coming lies are being designed to cause as much harm and fear in the population as possible. The administration is more concerned with political gain than with governing the nation. Why else would DHS release illegals in custody while purchasing over 2500 light tanks and APVs? Can we expect DHS to use those vehicles on the border? Hopefully the public is not buying the doomsday scenario as they did back when Clinton faced the government shutdown. Public panic caused the tactic to fail. Too bad> It would have been better to face the spending issue then than now with the situation of deficit and debt worse.
Bob K| 3.6.13 @ 11:21AM
SEQUESTER THIS!
http://market-ticker.org/akcs-www?post=218374
PolishKnight| 3.6.13 @ 2:04PM
What the sequester fiasco demonstrates is the relationship Obama and his minions have with the public. If their expenses are cut by 5%, and this is in increases in spending (not current projected spending), they go for the jugular and will cut the most personal or essential services or stuff they don't want to do in the first place. So instead of cutting back on staffing at DC offices, they delay travelers at airports.
On the other hand, for years they've been getting 5% increases overall for decades and what has the public gotten for it? Roads with potholes, bridges crumbling, space programs relying upon Russian rockets, poor educational performance, etc. while the office staff bloats.
It's like the way one of Tony Sopranos minions responded to a customer complaint about garbage collection: He said they didn't pick up his trash that week. So they gave him double his trash back. That's what he got for complaining. Just be happy they bother to EVER show up and don't take ALL your money away.
Bill8472| 3.6.13 @ 4:44PM
Two days after sequestration kicked in, the stock market hit its highest level since before the recession began.
It shows how hard the economy is struggling to bring prosperity to all of us, and also how hard the government is working to hold that economic growth back.
cicero| 3.6.13 @ 5:18PM
So, Obama has already convinced the public and the Republicans that it will be necessary to raise the debt ceiling? That was no great achievement. After all, he convinced 51% of the citizens voting in the last election to vote for him. The boobocracy reigns supreme. Not only that, but 4 million Republican voters stayed home and pouted because Romney was not their favorite to win the nomination. The only chance we will have of reegaining this country is if Obama, Biden, Pelosi, and Reid all break their necks falling off their bar stools, laughing at the country who has put them in power. Or maybe they will drown in the plunder they are wallowing in. Fat chance, eh?
Pecos Pete| 3.6.13 @ 5:33PM
If Hugo could accumulate $2 billion, I can't imagine how much has been siphoned off in the USA with multi-trillion $ spending over the past 6 years.
JD| 3.6.13 @ 9:43PM
It's Orwell's Ministry of Truth in action. Right is wrong, and wrong is right.
Witness CNN's recent article about the surrogate mother who refused to abort "Baby S" - chock full of reader comments condemning the woman for "cruelly playing God" by NOT slaughtering her baby.
So too, they speak of "cuts" that "harm the economy". But they're not talking about tax increases, which truly harm the economy by truly taking money out of the economy. No, they're talking about spending cuts necessary to AVOID tax increases - they think THOSE are "cuts" to the economy! How backwards!
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Ralph Novy| 3.9.13 @ 10:18PM
My word.
Do you not have at least SOME little shred of honesty/intelligence/decency in you?
What a filthy, totally idiotic screachy screed this was!
Go off for a while and rethink what it means to be a decent human being, eh?
Sheesh.