The Pro-Growth Sequester

                        The Obama administration is whipping up hysteria over the sequester budget cuts and their impact on the economy, the military, first providers, and so forth and so on. Armageddon. But if you climb into the Congressional Budget Office numbers for 2013, you see a much lighter and easier picture than all the worst-case scenarios being conjured up by the administration.

For example, the $85 billion so-called spending cut is actually budget authority, not budget outlays. According to the CBO, budget outlays will come down by $44 billion, or one quarter of 1 percent of gross domestic product (GDP is $15.8 trillion). What’s more, that $44 billion outlay reduction is only 1.25 percent of the $3.6 trillion government budget.

So the actual outlay reduction is only half the budget-authority savings. The rest of it will spend out in the years ahead – that is, if Congress doesn’t tamper with it.

And please remember that these so-called cuts come off a rising budget baseline in most cases. So the sequester would slow the growth of spending. They’re not real cuts in the level of spending. (Not that a level reduction is a bad idea.)

Looking at the sequester in this light, it’s clear that it won’t result in economic Armageddon. In fact, I’ll make the case that any spending relief is actually pro-growth. That’s right. When the government spending share of GDP declines, so does the true tax burden on the economy. As a result, more resources are left in the free-market private sector, which will promote real growth.

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Essentially, the sequester means there will be an annual increas of 6.9 percent intead of 7 percent and $2.4 trillion, instead of $2.5 trillion will be spent over the next ten years. Why not freeze the budget and go with what we had last year? There would be no cuts and no increase.


The Sequester has no more impact than changing a lightbulb. Obama set this whole thing up to generate public outcry against the conservative stirrings. Obama has openly stated that part of what needs to be done is to break the strength of the conservative thought. He actually thinks that he has a majority in the liberal column. Ben Bernake has so seriously trashed the fiscal ability of this government and trashed the actual values of the paper being printed just to keep the stock market looking good for the administration, but by the end the the Obama term, American coin will have depleted it’s value by more than half, and American credit rating may be irretrievable.
One can expound numbers till the cows come home and that wont make it so. This whole sequester thing is a smokescreen to hide Obama’s agenda to control the money and entitlements and the voting public.