The Balancing Act: An Alternative to Budget-Sequester Lunacy |
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| Posted by Sean Cribben on Feb 11 2013 |
| Blog >> |
 By: Bob Lucore
America is now nearing another completely avoidable austerity crisis. Like other recent budget battles, this crisis has nothing to do with the supposed natural workings of the economy, and everything to do with hostage-taking and intimidation by the conservatives in Congress and their billionaire Tea Party allies. This latest in the long line of super-committees, fiscal cliffs and debt-ceilings is called “the sequester.”
Recall that the budget deal reached by Congress and the President in late 2011 set up the
sequestration process. It was thought that the automatic draconian cuts would force politicians to come to a more sensible compromise over reducing spending and increasing taxes. That did not happen. If the sequestration process goes forward, the Office of Management and Budget will be required by law to withhold $948 billion in spending over the next decade. The cuts would be approximately evenly split between the Pentagon and domestic programs.
The economy is already anemic due to cuts in spending, the dwindling down of the stimulus, and the expiration of the payroll tax cuts. Just to keep the unemployment rate from getting worse, the economy needs to grow at 2.0 to 2.5 percent. But a broad spectrum of economists, representing organizations ranging from Goldman Sachs to the Economic Policy Institute (EPI), agree that the sequester process is likely to cut GDP growth to somewhere between 1.0 and 1.6 percent. EPI estimates that should the sequester go into effect, job losses of 660,000 are likely for the rest of 2013.
There is a sensible progressive path out of this self-induced predicament. The Congressional
Progressive Caucus has (once again) put forth a pragmatic proposal to end budget hostage-taking and generate jobs. The Balancing Act would cancel the sequester cuts, and replace them with $960 billion in new revenue from closed corporate tax loopholes and canceled tax breaks for the wealthy. It would cut $278 billion from the bloated Pentagon budget (which is actually less than the $500 billion called for under the sequester). In addition, the Balancing Act would make job-creating investments in education and infrastructure that are much needed.
As Andrew Fieldhouse of the EPI points out, the stimulus measures in the Progressive Caucus’s Balancing Act would add 0.8 percent to GDP and about 1 million new jobs by the end of 2013. Under current circumstances, where unemployment remains dismally high and the economy is running far below its potential rates of growth, it makes no sense to pursue additional spending cuts in domestic programs. Allowing the sequester process to go forward is lunacy. The more balanced approach proposed by the Progressive Caucus deserves much more attention than it has yet received.
Bob Lucore, a long-time ADA board member, is the former Director of Research and Policy for the United American Nurses and has worked for the Teamsters and the Department of Economic Research at the AFL-CIO. . He taught economics for several years at Centre College and Colorado State University and is currently studying Library and Information Science at San José State University. Bob is a member of UAW Local 1981, the National Writers Union.
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