I ran across an article on Forbes the other day, Suicide by Sequestration, that really popped out from the sea of economic porn upon which the magazine floats.
It certainly caused a lot of consternation there, but the whole of it was unimpeachable -- which was beautiful to behold. The comments basically amounted to a lot of sputtering.
The assumption that we need to cut the debt and deficit is a false and terribly dangerous premise. ANY reductions in the deficit are a mistake.
The comedy of errors being played out in Washington would be funny were it not for the fact that the real victims will be well outside the Beltway. Estimates of the job loss from sequestration range from 750,000 to 1 million. Not a single one of those will be from the individuals responsible for this debacle.
The economy will almost certainly fall back into recession, long term growth will be stunted, and confidence will be shattered.
And this helps how?
The author, John T. Harvey, proceeds to dismantle eight fallacies or Economic Babble Points that all flavors of politicians use to rationalize their policies of economic suicide.
I'm only going to quote a couple of these in full. Be sure to read them all. You'll be the smartest guy in the room wherever you go.
If we don’t reduce the national debt, the US could default:
This is the biggest fallacy of them all. Every penny of US debt is owed in a currency we are legally permitted to print. There is ZERO chance that we could be forced to default. We may choose to do so (just as a person in a room full of food could choose to starve), but that would be foolish. Greece, on the other hand, could indeed default, since they owe their debt in a currency they don’t control (there are, incidentally, many other reasons why the US and Greece are not analogous, but this one is key). For a longer explanation see It is Impossible for the US to Default.China controls our economy because we owe them so much money:
Even if the US government were in surplus, we would owe as much to China because our debt to them is simply the difference between how much we exported to them and how much we imported from them....The debt must be repaid:
We must, of course, meet the “monthly payments,” but the level of debt need never be zero....Deficit spending could create inflation:
Yes, it could, if we were already at full employment competing to buy expensive stuff....Cutting government spending frees up resources for the private sector to grow:
We have plenty of idle resources, the private sector is simply choosing not to employ them. There is no need to free up something that is already in excess supply....The government cannot create jobs:
Of course it can. In what sense are police officers, firemen, Marines, soldiers, teachers, national park rangers, FBI agents, and federal court judges not doing a job? A detective undertaking a murder investigation is not working? A CIA agent searching for Al Qaeda operatives is not providing a useful service and simply sucking at the teat of the private sector? Truth be told, not only are these very often hard-working and widely-admired individuals who are doing things that are of great social value, but when they go to the store or a restaurant, they create jobs for those in the private sector, too.Cutting the deficit by reducing spending puts money in my pocket:
This ignores the fact that a) you weren’t being taxed to finance the deficit in the first place (or it wouldn’t have been a deficit) and b) government spending is money in someone’s pocket. Thus, cutting the deficit by reducing spending actually removes money....Government surpluses help the economy grow:
In fact, surpluses represent a net drain on private-sector income. Think about it: what would happen if the government spent zero but still collected taxes?....::
Says the author:
For God’s sake, we have so many difficult problems facing us today. Why add to that by shooting ourselves in the foot–no, the head–by purposely reducing economic activity even more?
I’ll keep repeating these until President Obama listens! ):