Obama sequester

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The Obama sequester was a proposal by President Barack Hussein Obama to Senate Democrat Majority Leader Harry Reid relayed by then White House budget director Jack Lew tocut entitlement and defence spending[1] effective January 1, 2013. The idea was to break the deadlock over a federal debt ceiling debate in the summer of 2011 and "kick the can down the road" past the 2012 Presidential election over ways to pay for Obama's stimulus spending and "healthcare reform" during his first term.

Critics warned Obama's economic plan would create massive unemployment and a recession. Obama repeatedly claimed tax increases on the rich would pay for his plan, and Republicans compromised by voting for tax increases for the first time in two decades. As part of the deal, Obama's sequester cuts were delayed 60 days to avoid the inevitable fiscal cliff of his plan.

What the sequester is

The Obama plan called for the President to issue Executive Orders for immediate cuts totally $85 billion to be divided equally between defence spending and programs such as Medicare and Social security for the remainder of fiscal year 2013. On the employment side, defence cuts are reflected in lost payrolls totalling half of the sequester, or $42.5 billion; this is essentially $10,000,000 per hour in reduced payroll spending[2] by the federal government for individuals employed mostly as civilian contractors. Many will see permanent jobloss. A ripple effect, or "trickle down" effect will been seen soon thereafter in lesser paying retail positions.

Democrat plans for dealing with sequester

The Democrats are said to be planning calls for more extended unemployment benefits and infrastructure projects, which is of course, what the sequester is paying for from Obama's first term. Infrastructure projects do nothing to solve the underlying problem of unemployment, leaving workers unemployed, again, once the project is completed or government funding runs out.[3] Likewise, extended unemployment benefits do nothing to address the problem of job creation.

Notes

  1. Obama’s sequester deal-changer, By Bob Woodward, Washington Post, February 22, 2013.
  2. a classic picture of what is meant by the term, "economic contraction".
  3. There is a limit to how many highways, bridges, and public buildings can be built. And it is States and localities that must pay the cost of permanently maintaining them. Many states and localities are already struggling to maintain basic services like police, fire, and teachers. As FDR discovered, "infrastructure" is just a campaign slogan that only prolongs the crisis and extends the suffering.
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