Knowledge is Power


This is going to be a long one, but I hope you’ll indulge me by reading it anyway.

I was doing some research last night and learned some disturbing news about a bill that Congress passed after the debt ceiling debacle of 2010.

First, some backstory.

We all remember the fight in congress a couple of years ago where Republicans refused to raise the debt ceiling. At the time, the argument was framed in a way that was misleading. Well, actually it was a lie.  Here’s why.

We were told that the refusal to raise the debt ceiling was a refusal to borrow more money. It was put forth as the equivalent of refusing to buy a new house on credit that we couldn’t afford.

What it actually was, was a refusal to pay on debts we had already incurred. It was really the equivalent of refusing to make a house payment on a house we had already bought on credit and moved into.

Now, rather than default on our loans, the Democrats met with Republicans and wrote a law they called the Budget Control Act.  The law was passed and signed by President Obama in August of 2011.

The act included a provision where a committee of twelve, six Democrats and six Republicans would be required to come up with a way to reduce the deficit over the next decade [2021].

As an incentive to the committee, a plan for cutting spending was put into the bill that would go into effect automatically at the end of 2012. The spending cuts were massive and across the board.  The bill set a deadline for the committee to reach an agreement, and on November 21, 2012, the committee revealed that they couldn’t come to an agreement.

Now, most of the records of the committee meetings are sealed. The general public is barred from reading the minutes, and we are basically forced to take the committee members’ word for it on what actually happened.

Republicans said that the reason they couldn’t come to an agreement was that Democrats refused to cut entitlement programs. Democrats said that it was because Republicans refused any and all tax increases.

Now, it’s important to remember that our government currently doesn’t receive enough money in tax revenue to balance the budget. Taxes are going to have to be raised for someone if we’re ever going to be able to reduce the deficit.

Grover Norquist has been going around for years, forcing Republicans to sign a pact stating that they will never raise taxes, no matter what.  He’s proven more than once that if a Republican goes against the pact, they will not be re-elected. George H. W. Bush failed to be re-elected largely because he approved a tax hike.

I have no idea how Norquist managed to get so much power, but he’s not afraid to use it and basically destroys any Republican who reneges on the deal.

So the Republicans continue to refuse to raise taxes, even though there is no other way to cut the deficit. In fact, the party line is that taxes should be cut, no matter what.

Now, the other half of the equation is that spending has to be cut as well. Republicans are notorious for putting social safety net programs up for cuts, but they nearly always refuse to cut defense spending, and in fact, Mitt Romney and Paul Ryan advocate more tax cuts for the rich [even though it will increase our deficit] while also increasing defense spending.

There isn’t enough money in social programs to offset the increases in defense spending, or decrease the deficit, especially when you continue to reduce revenue with tax cuts, which means that funding for education, infrastructure, and various other programs will have to be cut as well.  We’re talking roads and bridges, public schools, non-profit colleges, science programs, including the money we spend on research and development for curing diseases and a bunch of other stuff that has the potential to make life better for all of us.

So at the end of 2012, the Budget control act will force these across the board cuts to programs that are necessary for our country to function.  The Republican refusal to increase taxes, in spite of the fact that there is no way to balance the budget without it, put the committee into gridlock and an agreement couldn’t be reached.

Now, the Democrats probably did refuse to cut entitlements, but my guess is that they refused it because the Republicans refused to raise taxes. Our deficit is high enough that it is impossible to balance the budget without increased revenue.  Couple that with the Republican insistence on cutting taxes for the wealthy even more, and you’ve got a serious problem.

You can’t cut spending AND taxes and reduce the deficit.  The math just doesn’t work.

So here we are. The budget control act automatic spending cuts will go into effect on January 1, 2013 if Congress can’t figure out a way to reduce the deficit.  The act doesn’t increase taxes, except to allow the Bush Tax Cuts to expire.

Now, what that means for the middle class is that the tax cuts we received will go away. Our tax bills will increase, and for those of us who are barely making it as it is, more people will fall below the poverty level.

The wealthy will have their taxes go up, too, but since they already make massive amounts of money, the increase in taxes might prevent them from buying a second home, but they won’t have to struggle to put food on the table like the rest of us.

It’s also important to realize that the budget control act is a law. Unlike the budget proposals that the Democrats, Republicans, and President put forth each year to be voted on, the budget control act is legally binding.

Budget proposals are nothing more than an outline of how each group thinks we should allocate our national budget money for the next year. They are not legally binding, so even if Congress approves a budget, they can ignore it or follow it and there are no real consequences.  It’s kind of like when I write a schedule for my day. I can follow the schedule or chuck it, and the only effect is that I decided to do something else.

The Budget Control Act is a law. These spending cuts will go into effect unless congress votes to repeal or amend it.  What the Republicans did by holding the debt ceiling hostage was force Democrats to pass a law that very well may slam  our country into a downward spiral of depression.

The cuts are dramatic, and they will affect all of us.  As government spending decreases, real people lose jobs.  When people lose jobs, they stop buying stuff, which causes businesses to close, which leads to more job losses, and on and on.

The only people who will be left standing after such a devastating spiral are the people who are already wealthy.  The middle class could disappear completely.

So when you hear people talking about the ‘fiscal cliff’ and ‘sequestration’ you need to be aware that this all started with Republicans threatening to default on our mortgage.


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