For John, BLUF: We are likely going to face some serious Federal Budget cuts, with reverberations down to the local streets.
The Agenda for the US House of Representatives for this coming week doesn't seem to focus on Sequestration and the Fiscal Cliff. No mention of either, although there will be a hearing on Workforce Investment System.
This issue is also tackled by The Wall Street Journal, which sees us going over the Fiscal Cliff.—Lengthy Impasse Looms on Cuts: Budget Standoff Presents Political Risks on Both Sides. What about the "economic risks" on all sides? At any rate, the writers are Peter Nicholas and Damian Paletta.
Lawmakers in both parties anticipate that a looming set of spending cuts will take effect next week and won't be quickly reversed, likely leading to protracted political uncertainty that presents risks both to Congress and President Barack Obama.Some argue that our problem is not capacity—its political will.— As Sean Kay wrote in his book on Ireland's crisis and its lessons for America—the question isn't "yes we can". Its rather "will we?" We here in the US lost a credit rating not because they thought we couldn't pay back our debts, its that they thought we might not have the political will to do so.
WSJ's Damian Paletta says the sequester cuts - including painful slashing of defense spending - now seem inevitable. The question now is how long they'll last. WSJ's David Wessel explains the hit to federal employees and when furloughs could kick in.
It had been thought that the cuts, some $85 billion through the rest of the fiscal year, could be averted or quickly replaced with a longer-term deficit-reduction plan. Those expectations have now dissipated. No significant negotiations are known to be under way between the two parties, which are at an impasse over Mr. Obama's demand that any plan to replace the cuts include more tax revenue.
The president and congressional Democrats are looking beyond Friday, when the across-the-board cuts, known as sequestration, are due to take effect. Their strategy is to persuade the public that the cuts would harm defense, education and other programs, make air travel difficult and cost jobs, among other effects. They hope public pressure would force Republicans to reverse course and agree to new tax revenue.
. . .
Republicans believe they can stay united by accusing Mr. Obama of campaigning rather than negotiating and reminding people that they have backed legislation to replace the cuts to defense programs with nondefense cuts. They say they won't bend to Mr. Obama's demand for new tax revenue and that the public supports their goal of reducing the deficit.
"I don't think anyone on our side is squirming," said Brendan Buck, a spokesman for House Speaker John Boehner (R., Ohio). "We feel like we're on very strong ground."
A lengthy dust-up over the spending cuts threatens to derail parts of Mr. Obama's legislative agenda. He is now using campaign-style tactics against Republicans whose support he would need to pass an immigration overhaul, an expansion of early childhood education and stricter gun controls. He is set to travel outside Washington next week to illustrate the hardships resulting from the sequester—time that he would rather devote to his legislative agenda.
The above paragraph does assume that we have some sort of a consensus on the way forward. While almost all think that Mr Grover Norquist's idea of reducing the size of the Federal (and State) Government by reducing taxes is a bit extreme, notwithstanding his success so far, it is not clear that everyone thinks the Keynesian approach to getting out of this hole is the correct approach. We need the political will to move forward, but we also need agreement on which is the proper direction.
We are about to find out if Commenter Jack, who does have skin in the game, is correct about letting the Sequester happen.
Regards — Cliff