In an opinion piece in the Financial Times, Obama Has Always Planned To Slash Spending, Jeffrey Sachs argues that President Obama will get the result he has asked for when the sequester kicks in tomorrow. Despite the rhetoric placing blame on Congress, this is his bargain, the hand he dealt, and the result will be austerity.
More below the kossant de l'orange
With Austerity the general public is on the losing end. Who then might the winners be? You guessed it. The one percenters, the already wealthy beneficiaries of the Bush tax cuts made permanent under Obama.
The Sachs article is behind a free subscription wall, so I'll post a couple of excerpts for those who aren't subscribers. It is worth the read.
As Sachs explains, Obama's actual budgets have called for discretionary spending cuts not too different from what this sequester will bring.
Each year he has put a budget on the table. Each year that budget has called for a sharp decline in discretionary spending as a share of gross domestic product in 2012 and later years. His rhetoric about increasing public investments in America’s future has always been contrary to the budgets he has presented, though most of his supporters have been unaware of this contradiction.And these cuts will indeed hurt many of us, just as we have expected that Austerity would. This appears to me to be the next phase of Klein's Shock Doctrine in full motion.
These cuts are now taking hold, and they will indeed hurt. Mr Obama’s supporters will be very puzzled – many will doubt the basic fact that these cuts have long been ordained by the president, at least in general terms, though not exactly as they will now occur. Why would a progressive president plan for deep cuts in discretionary spending relative to GDP even as he advocates larger investments in health, education, infrastructure, clean energy, science and technology, job training, early childhood development and more?According to Sachs, that was the Faustian bargain. By openly extending the Bush tax cuts, benefitting the minority rich population, he more stealthily budgeted for major spending cuts, hoping that when the time came there would be more support for raising taxes to soften the blow. So far no such soft landing seems evident.
There is a simple answer that is the key to American federal politics of our time. Mr Obama ran for office in 2008 and 2012 promising to make permanent the Bush-era tax cuts for almost all Americans. These tax cuts were unaffordable from the start and were scheduled to expire in 2010. But to say so honestly, while the Republicans were promising to make them permanent for everybody, would probably have cost Mr Obama both elections.
Yet he has never presented an alternative with more robust tax revenues in order to fund a higher sustained level of public investments and services.At this point it seems a bit late.
So now the moment of truth has arrived: we are on the path of deep cuts in discretionary programmes relative to national income. The truth is that America needs higher public investments and it needs more tax revenues to fund them. Mr Obama is finally saying some of these things, though still without specific tax proposals.
Do you agree with Sachs? Even if you don't, are you going to be hit by the Sequester directly or indirectly?