The Agitator #84 - Budget gridlock
by Oliver_Halle
 The Agitator
September 05, 2013 03:36 PM | 1632 views | 0 0 comments | 14 14 recommendations | email to a friend | print | permalink

This is going to be an interesting six weeks or so.  First, there is the subject of the upcoming new fiscal year that begins October 1st.  Will congress pass continuing resolutions to keep government functioning, or will it shut it down, as some Republicans are threatening, if Obamacare isn’t defunded?  And then there is the debt ceiling that will be reached about two weeks later according the Secretary of the Treasury, Jacob Lew.  Again, a number of Republicans have said that they will not vote to raise it despite having voted for the spending of monies whose bills are now due.  Recall that the last time a debt ceiling compromise was reached we got sequestration. 

In case anyone has forgotten, the current sequestration involving cuts across the board is supposed to continue until 2022.  So far it has affected mostly programs that impact the poor.  When the FAA had to furlough aircraft controllers, our elected reps didn’t like having to wait at airports because of delayed flights, and somehow the funding was restored.  Robins AFB in Warner Robins was about to get hit hard with layoffs of civilian contractors until money was somehow found.  What many don’t realize is that laid off contractors spend a lot of money in the local economy.  A lot of other smaller communities that rely on the money that federal contractors bring are going to be in for some very hard times.  Cobb County will likely feel the pinch too with work related to Lockheed. 

The ripple effect of fewer dollars in the economy is coming our way.  My spending is your income, and vice versa.  When the money’s not there, guess who is going to get hurt?  I heard a financial radio talk show host the other day who gave some good advice to a caller about the need to cut nonessential spending and save more.  This was sound microeconomic wisdom, but I could sense the howling from the restaurants, coffee shops, house painters, cleaning services, the MDJ that relies on subscribers, and all the other small businesses that depend on the money that this person and others similarly situated will not put into the economy, which is what macroeconomics is all about.  What may good for the individual can be devastating for the larger community. 

We know from the experience of WW II that government spending is absolutely essential to the economy.  It was the single largest cause of ending the Depression.  Immediately after the war, when the government dramatically cut spending, many businesses suffered.  We also know that the costly GI Bill from that war was one of the biggest reason this country experienced prosperous times, that people who never could have afforded an education not only got one, they became the captains of industry and leaders of our great country.  Yet we have legislators who will never miss a stump speech to talk about our national debt and deficit spending, but vote for every spending bill that only benefits their constituents, particularly unnecessary weapons systems, and then denounce Obama who is responsible for ensuring that the invoices for these things get paid. 

For those who support Republicans because they promise to vote to defund Obamacare, you are the victim of their version of three card monte.  What have you heard lately about IRS hearings?  Any news from your congressman or senator about what they are doing to change the tax code? When it comes to taxes I have to believe that despite differences in political thought, especially with most people in Cobb County, we can agree that the tax code has got to go.  But it won’t.  And it won’t because the special interests like their credits and exemptions that give them an advantage, and they pay for it through campaign contributions and lobbying.  Meanwhile, as the three card monte of politics continues, once again  we are all the losers.  One thing for sure: As long as the same losers are reelected, we should not be surprised when things get a lot worse. 

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