Greenspan: Odds of Sequester ‘Very High’
February 18, 2013 By Jon Street – cnsnews
(CNSNews.com) - Former Federal Reserve Chairman Alan Greenspan said he thinks the odds of sequestration occurring are “very high” while adding that it’s “very difficult” to think through a scenario in which across-the-board, dramatic government spending cuts, also known as the sequester, will not happen.
Greenspan called sequestration a “pretty much expected” event while concluding that if the stock markets can hold up through it, the effect would be “rather minor.”
During a CNBC interview on Friday, Greenspan was asked, “If [sequestration] does, in fact, take effect on March 1 and those spending cuts take place, what kind of an impact would you expect on the broad economy?”
Greenspan responded, “Well, I think the odds of it occurring are very high. In fact, and I find it very difficult to even think through a scenario in which it doesn’t happen. The effect is not going to be horrendous, but it’s going to be marked.”
“At the moment, I think the critical issue is how does it affect the stock market, and he reason for that is the stock market is the really key player in the game of economic growth at the moment, because there are two factors about stock prices, which I think, are important to understand. The first is that the so-called equity premium that is, the rate of return that equity is required is a very high number – close to the highest number probably in American history,” he said.
I don’t understand the Republican position on the sequester
2/25/13 Posted by Ezra Klein on February 25, 2013 at 2:13 pm
As I understand it, the GOP has five basic goals in the budget talks:
1) Cut the deficit.
2) Cut entitlement spending.
3) Protect defense spending, and possibly even increase it.
4) Simplify the tax code by cleaning out deductions and loopholes.
5) Lower tax rates.
The White House is willing to cut a deal with Republicans that will accomplish 1, 2, 3 and 4. But Republicans don’t want that deal. They’d prefer the sequester to that deal. That means they will get less on 1, basically nothing 2, 4, and 5, and they will actively hurt themselves on 3. So, rather than accomplishing four of their five goals, they’re accomplishing part of one. Some trade.
I’ve asked some Republicans sources to explain their thinking to me. But none of the answers quite seems to add up.
A Balanced Plan to Avert the Sequester and Reduce the Deficit
President Obama believes that our guiding focus must be growing the economy and strengthening the middle class. That’s his North Star, and it’s why he won’t accept cuts that force the middle class to bear the burden of deficit reduction.
The President has put forward a specific plan that will avoid sequestration’s harmful budget cuts and reduce the deficit in a balanced way — by cutting spending, finding savings in entitlement programs and closing tax loopholes.
Both parties have already come together to cut the deficit by more than $2.5 trillion and today the deficit is coming down at the fastest pace since then end of World War II.
President Obama’s plan builds on this progress and would cut the deficit by another $1.5 trillion, bringing it below its historic average.
A Balanced Plan to Avert the Sequester and Reduce the Deficit
In eight days, harmful automatic cuts are slated to take effect, threatening hundreds of thousands of jobs, and cutting vital services for children, seniors, people with mental illness and our men and women in uniform.
Only Congress can avoid this self-inflicted wound to our economy and middle class families, and the only thing standing in the way of a solution today is Congressional Republicans’ refusal to even consider closing tax loopholes that benefit wealthy Americans and well-connected corporations. The President and Congressional Democrats have put forward solutions to avoid these cuts and allow time for both sides to work on a long-term, balanced solution to our deficit challenges.
The President is serious about cutting spending, reforming entitlements and the tax code to reduce the deficit in a balanced way. The question is, will Congressional Republicans come to the table to get something done?
Let’s take a moment to look what we’ve done so far: The President has already reduced the deficit by over $2.5 trillion, cutting spending by over $1.4 trillion, bringing domestic discretionary spending to its lowest level as a share of the economy since the Eisenhower era [see below]. As a result of these savings, together with a strengthening economy, the deficit is coming down at the fastest pace of anytime in American history other than the demobilization from World War II.
And he’s laid out a specific plan to do more. His proposal resolves the sequester and reduces our deficit by over $4 trillion dollars in a balanced way- by cutting spending, finding savings in entitlement programs and asking the wealthiest to pay their fair share.As a result the deficit would be cut below its historic average and the debt would fall as a share of the economy over the next decade. Just two months ago Speaker Boehner said there was $800 billion in deficit reduction that could be achieved by only closing loopholes and reducing tax expenditures. So we know we can get this done. Let’s be clear: the President’s proposal to Speaker Boehner is still on the table. Here it is again
We can’t just cut our way to prosperity. Even as we look for ways to reduce deficits over the long term, we must grow the economy in a way that strengthens the middle class and everyone willing to work hard to get into it.
“Congress might allow a series of automatic, severe budget cuts to take place that will do the exact opposite. It won’t help the economy, won’t create jobs, will visit hardship on a whole lot of people.
Here’s what’s at stake. Over the last few years, both parties have worked together to reduce our deficits by more than $2.5 trillion. More than two-thirds of that was through some pretty tough spending cuts. The rest of it was through raising taxes — tax rates on the wealthiest 1 percent of Americans. And together, when you take the spending cuts and the increased tax rates on the top 1 percent, it puts us more than halfway towards the goal of $4 trillion in deficit reduction that economists say we need to stabilize our finances.
Now, Congress, back in 2011, also passed a law saying that if both parties couldn’t agree on a plan to reach that $4 trillion goal, about a trillion dollars of additional, arbitrary budget cuts would start to take effect this year. And by the way, the whole design of these arbitrary cuts was to make them so unattractive and unappealing that Democrats and Republicans would actually get together and find a good compromise of sensible cuts as well as closing tax loopholes and so forth. And so this was all designed to say we can’t do these bad cuts; let’s do something smarter. That was the whole point of this so-called sequestration.
Unfortunately, Congress didn’t compromise. They haven’t come together and done their jobs, and so as a consequence, we’ve got these automatic, brutal spending cuts that are poised to happen next Friday.
Now, if Congress allows this meat-cleaver approach to take place, it will jeopardize our military readiness; it will eviscerate job-creating investments in education and energy and medical research. It won’t consider whether we’re cutting some bloated program that has outlived its usefulness, or a vital service that Americans depend on every single day. It doesn’t make those distinctions.”
White House’s state-by-state reports (.pdf) of sequester damage
Judges urge Congress to avoid more sequestration cuts
August 15, 2013 By Mark Sherman, washingtonpost
Top federal judges in 49 states are urging lawmakers to avoid another round of automatic spending cuts that they say would have a “devastating and long-lasting impact” on the federal courts.
The unusual letter from the chief judges of trial courts in every state but Nevada says that the $350 million reduction in the judiciary’s lower budget for this year has dramatically slowed court proceedings and jeopardized public safety. The judges say there are fewer probation and other law enforcement officers to deal with record numbers of convicts who have been released from prison or given alternative sentences.
The letter was sent this week to congressional leaders in both parties in the House and the Senate. Congress is not in session in August.
“We had to let people know that we’ve cut so far past the fat and so far past the muscle that we’re into the bone,” Chief Judge Loretta Preska of the U.S. District Court in Manhattan said Thursday.
On Wednesday, Republicans on the House Education and Workforce Committee approved H.R. 5, the Student Success Act. The legislation would lock-in sequestration funding levels, eliminate accountability for taxpayer dollars, and allow states to shift Title I funds from high-poverty schools to more affluent districts. Today, the White House is releasing a report that provides a state-by-state impact of locking in ESEA funding levels at sequestration and a list of the school districts most negatively impacted by changes to the Title I allocation formula.
After an economic crisis that hit school budgets and educators hard, we cannot just cut our way to better schools and more opportunity. H.R. 5 would deny students and teachers the resources they need by:
- Cementing recent education cuts
- Eliminating guarantees that education funding reaches the classroom
- Cutting investments to those schools that need help most
- Eliminating accountability for taxpayer dollars