On August 11, 2015, Rebecca Shabad writes on The Hill:
Reversing sequestration spending caps could create as many as 1.4 million jobs over the next two years, the nonpartisan Congressional Budget Office (CBO) said Tuesday.
At the request of Sen. Bernie Sanders (I-Vt.), the ranking member on the Senate Budget Committee, the CBO analyzed the macroeconomic effects of completely eliminating the budget cuts, which are set to return in full force in October.
Easing those ceilings would lead to increased government spending, which in turn would lead to an increase in economic output and higher employment, the CBO said.
“Fully eliminating the reductions would allow for an increase in appropriations of $90 billion in 2016 and $91 billion in 2017,” CBO Director Keith Hall wrote in a letter to Sanders.
If Congress reverses the limits in fiscal 2016, for example, the CBO said it could result in the full-time employment of as few as 200,000 more people or as many as 800,000 more people. If the same were done for fiscal 2017, the CBO said it could similarly add as few as 100,000 jobs or as many as 600,000 jobs.
The CBO said sequestration relief would also cause the gross domestic product to grow by as much as 0.6 percent in 2016 and as much as 0.4 percent in 2017.
Hall explained that the increase in economic output and employment resulted from offsetting forces. They include increased aggregate demand but a tightening monetary policy to reflect a strengthening economy, which would dampen some of the growth.
In the long-term, however, Hall warned that increased spending would lead to increases in federal deficits and lower output and income.
In a statement, Sanders said the CBO’s analysis proves the “arbitrary sequestration caps have never made any sense.”
The Vermont independent, who’s running for the Democratic presidential nomination, characterized the CBO’s findings as job losses in the next two years if sequestration caps are maintained.
“If Congress does not act to end sequestration, we’re looking at the loss of as many as 1.4 million jobs over the next two years,” he said.
That’s not exactly how the CBO framed it. Hall said that sequestration relief could add as many as 1.4 million jobs, or as few as 300,000.
Still, Sanders called for an end to sequestration before the cuts take effect again on Oct. 1.
“We must end sequestration now ahead of the end of the fiscal year and prevent a budget showdown that will help nobody,” he said. “It makes no sense to head towards a crisis when we have a clear path towards a better solution.”
Lawmakers on both sides of the aisle have expressed support for relieving sequestration again, which Congress had approved in a 2013 budget deal that applied to 2014 and 2015.
Reversing sequestration entirely is unlikely, and President Obama has asked Congress to increase spending next year for the Pentagon by $38 billion and spending for domestic programs by $37 billion.
Before leaving for August recess last week, Senate Majority Leader Mitch McConnell (R-Ky.) told reporters that Republicans would hold budget talks with Democrats at some point in the fall. Democrats have been demanding that GOP leaders hold a “budget summit” for months.
Senate Minority Leader Harry Reid (D-Nev.) warned in a New York Times op-ed on Tuesday that GOP leaders must come to the negotiating table to avoid “the next budget crisis.”
Reversing the sequester budget cuts will result in more national debt, because the revenue to the government is not from extracted taxes but is debt financed with a promise to pay by taxpayers at a future date, including compounding interest on the credit extended. What happened to the objective of balancing the budget? We are already borrowing hundreds of billion each year to operate the government (rather than extracting taxes), and our national debt is somewhere near $20 trillion.
Plus, why is not the government insistent on contract work orders that stipulate that the corporations awarded the contracts are fully employee-owned?
Most of the allocated $181 billion will go to enrich the OWNERS of the corporations awarded the government contracts, with the workers ONLY earning (wages) through a job. But the additional national debt will be sold to Americans as job creation in the number of potentially 1.4 million (or approximately an expenditure of $130,000 per job created).
We desperately need to transform to a capital OWNERSHIP economy, in which EVERY child, woman, and man can contribute productively to the growth of the economy through the “means of production” they OWN (as individuals), rather than borrowing against all of our futures. We need to transcend from JOBS ONLY wages to capital ownership dividend earnings (actually both income sources), which will result in far more “customers with money” to create the demand to produce the products and services needed and wanted by Americans.
