There is a great debate going on in Washington now over the mandatory spending cuts tied to the sequester, which is set to take effect in just three weeks.
If Republicans are correct in their claims that massive austerity-style budget cuts will cause the economy to thrive, they will gain credibility and political capital. If they are wrong, America could face another recession and the Grand Old Party (GOP) could be forever branded as a group of economic fools. The stakes could not be higher.
Some Americans believe that spending cuts, like those due to kick-in with the March 1 sequester deadline, will help them financially.
A recent Fox News poll found that “73 percent of voters polled say cutting government spending would be more likely to help strengthen the nation’s economy -- as opposed to just 15 percent who believe increasing spending would do the trick.”
Those numbers include 91 percent support for austerity measures from Republicans, and 55 percent from Democrats.
However, the Obama administration disagrees, claiming that across-the-board spending cuts could pose serious risks to the economic stability and national security of the US.
At a press briefing on Tuesday, President Barack Obama advised congress to scale-down the sequester cuts and add tax reform to the package to raise revenue for deficit reduction. In its current form, Obama believes the sequester puts “the jobs of thousands of Americans” at risk.
The Sequester is the result of a deal negotiated between Obama and House Republicans in August of 2011, intended to stave-off GOP threats to force America into default by refusing to raise the debt ceiling limit. It was an act that had never been used in the past as a political bargaining tool.
Included in the sequester plan are budget cuts to the Defense Department and other programs, which will cause furloughs and layoffs to hundreds of thousands of federal employees.
As with most instances of rising unemployment, the domino effect through local economies exacerbates economic contraction.
“Slashing government spending destroys jobs and causes the economy to shrink,” economist Paul Krugman wrote in The New York Times.
So who is right? Democrats who want targeted budget cuts and additional revenues through closing tax loopholes on the rich, or Republicans, who have built their ideological philosophy around using the government to defend the wealth of the wealthy, and the elimination of social safety net programs like Social Security, Medicare and food stamps?
If history is the judge over which policies are more effective at growing the economy for the greatest number of Americans, there should be little doubt that policies that strengthen the middle-class promote more economic growth than those targeted only at the nation’s highest incomes.
Former Clinton administration Secretary of Labor Robert Reich, writing for American Public Media's marketplace.org, suggests:
“One of the most pernicious economic falsehoods you'll hear… is there's a necessary tradeoff between fairness and growth. By this view, if we raise taxes on the wealthy the economy can't grow as fast.
"Wrong. Taxes were far higher on top incomes in the three decades after World War II than they've been since. And the distribution of income was far more equal. Yet the American economy grew faster in those years than it's grown since tax rates were slashed in 1981.”
The sequester debate can be viewed as an icon of the profound differences in the political, social, and economic theories that separate Democrats from Republicans. Liberals want to promote more opportunity for the working class by leveling the playing field through policy, while conservatives believe businesses should be trusted to operate on their own terms and give away some of their profits in the form of jobs.
As with most ideological battles, the choices made by lawmakers are experiments tested on the public. Few of the millionaire-class of leaders in Washington will be personally affected by deep cuts to safety net programs, or any other austerity measures they would impose on the American people. Does that mean their judgement is skewed? It's is a fair question, one Americans should ask themselves the next time they step into voting booths.
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