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Friday, February 22, 2013

Sequestration Bites


For John, BLUFSequestration will have an impact on people here in the Commonwealth, perhaps our friends, relatives and neighbors.

I don't think that Sequestration will happen.  I am expecting the adults in Congress to cut a deal that makes some progress toward taming the deficit and debt, but which doesn't throw hundreds of thousands out of work.

A friend of someone I know works the Army budget.  This Budgeteer's take on Sequestration is that it will happen, and here is the reason:

Republicans like it because it cuts spending.  Democrats like it because it cuts defense.

So … both sides get something they want.

Well, that is fairly cynical, but also insightful.  An internal Army "G-8" briefing circulating on the Internet shows the impact on Massachusetts in terms of Army only cuts. The Army sees us experiencing about $140 million in economic loss, which includes 47 furloughs and 574 expected layoffs.  It is to be noted that this doesn't address the impact on Raytheon (and others) from Navy and Air Force cuts that will be coming along.

Overall impact from the Army share of this—nation wide—is expected to be about $15.35 billion, with some 302,626 jobs impacted one way or another.  The biggest hits are Texas, Alabama, Virginia and Pennsylvania, each over a billion dollars.

Here is another view of the issue, although the author's projection of 1 million people being impacted looks at more than the US Army.  At the link is another link, going to a briefing that looks at the out years and the debt projection.  That briefing sees health care as being a major driver in the debt issue.

Regards  —  Cliff

10 comments:

Jack Mitchell said...

"... some progress toward taming the deficit and debt, but which doesn't throw hundreds of thousands out of work." ???

I distinctly remember Mitt Romney saying 'Gov't does create jobs.'

Ummm. Gov't can lose jobs, though?

Neal said...

The government does create jobs....Federal ones....that don't produce products or marketable services. Indirectly, the infusion of cash into the Defense industry (as well as others that produce what the government itself consumes) creates some additional jobs. That is a given, but we've slipped into the notion that government IS the job creator and that is a false premise...but one that Obama continues to promote and believe in.

Having said all that......all the Chicken Little hand wringing going on is little more than partisan political hysteria employed to scare the public into doing Obama's bidding. Typical of this sort of ruse is the Navy's decision to not deploy a carrier to a very critical mission theater and for the AF to correspondingly predict groudings and the Army to see all sorts of losses. Why would you cut the most important things first?? Even a person with a single digit IQ wouldn't advocate that. The human body is even smart enough to terminate or furlough the least critical body parts and functions progressively until death occurs or the crisis passes.

This is simply another demonstration of Obama leading by hysteria and hyperbole.

It's not even 2% for heaven's sake.

Jack Mitchell said...

I should use the Preview: "Mitt Romney saying 'Gov't does not create jobs."

Aside from the Obama hate, Neal isn't too far off. The various gov't entities, DoD & non-DoD, are using scare tactics to shift public sentiment.

Part of the hysteria is based on the reality that 'upper middle class Americans,' who have so far dodged this economy, are going to take it on the chin. tut tut

I just wanted to point out that GOPers love the Gov't teat.

The Sequester should come, imho. Deal with it and evolve. I say that as someone with skin in the game.

C R Krieger said...

Jack was a little sarcastic about Governor Romney saying Government not creating jobs, and Neal didn't give the Government quite enough credit.  The Government, by taking taxpayer money, does create jobs.  Well, and by deficit spending, which is, ultimately, a self-limiting action.  When the Government pushes the bubble, like with NASA, new products emerge in a synergistic manner.  When Government does real job training, it creates people who can fill the jobs that are already out there.

However, the thing is, Government spending has a lower "multiplier" than the private economy.

The real question is how to kick-start the economy, once it stalls.  I don't think we have a consensus.  And, without a consensus, we can't bring the parties together.  If you think Keynes is wrong, why back a $1.4 Trillion stimulus.  If you think there are other factors at work, is limiting the stimulus to $800 Billion the economically correct thing to do?  There are the Arrogant out there, but then there are the Searchers.

Special note for Jack.  Not every blog provides "Preview".  I won't take the electrons to list them in the local area, but I do find "Preview" a useful tool.  It is especially helpful in catching formatting errors. :-)

Regards  —  Cliff

Mr. Lynne said...

Demand is the job creator and the Government can create demand. Some circumstances when it might be desirable for Government to do so might be when joblessness is high, interest rates are low. I wonder when that might be?

http://www.bloomberg.com/news/2013-02-21/spend-now-it-ll-save-us-money-.html

Jack "Test" MItchell said...

Cliff,
I'll admit, I use this blog to check my HTML in comments for other blogs, like GNL.

If you see an unrelated comment from "Test," that is me. I normally use diaries that are well past their shelf life, btw.

C R Krieger said...

Re Mr Lynne, if the Government raises taxes, in decreases demand, as apparently has happened to Walmart.

Regards  —  Cliff

C R Krieger said...

For Jack, test on!

Regards  —  Cliff

Mr. Lynne said...

"Re Mr Lynne, if the Government raises taxes, in decreases demand, as apparently has happened to Walmart."

Hence my point about interest rates.

I'd also note that there is a segment of the population for whom raising taxes does little for demand. Also, note the ridiculous amount of profits that people are sitting on just waiting for a signal that demand is about to change.

Neal said...

Mr. Lynne said: "there is a segment of the population for whom raising taxes does little for demand." If you posit that taxes are revenue that is then used by the government to cause demand, I would submit that taxes are taxes and where the taxes come from doesn't directly affect demand. I know you are speaking of the middle class, but I would suggest that the "middle class" portion of the population is exceedingly smaller than folks want to realize. In many states now, the earners are outnumbered by the recipients of government "help." I suggest that will shortly be a national phenomenon. That being the case, they pay NO taxes, and I would further suggest that Romney's unfortunate and politically stupid comment about the 47% was none-the-lees essentially true. That percentage is dependent on the government and their view is exceptionally myopic, only desiring to ensure they get their support on time. As it stands now, an unmarried mother on the government dole "makes" more per hour than many if not most wage earners for a 40 hour work week.

I think of the many lessons this society should have learned is that you get more and more of what you continue to reward. The problem is, over time, the "provider" pool shrinks to zero. The government can "create" all the jobs it wants, but if people figure out that they make more by NOT working.......

For Jack, I'm not an Obama hater, but I do recognize his strategy and IMHO it is a bad way to run the country.

Obama says that his goal is to eliminate the Republican party, that this is "war." I would suggest that bravado conveys a real lack of appreciation for reality and history. Like the three divisions of government, without the moderating effect of a counter-view, we are left with all of the unrestrained extremes of a single view. Sadly, once you get so far down that path, the turn-arounds are virtually gone. I think we are getting close.

The absolutely silly part of all of this is the unwillingness of inability of folks to see the fallacy in their partisan worship of "liberalism" vs. "conservatism." Many "liberal" ideas are in fact quite conservative and much to the chagrin of Republican purists, many conservative points are in fact quite liberal...in fact so liberal that they outliberal the liberals. Point being, claiming one is this or that while abhorring the other point of view is both uniformed and unrealistic....IMHO