WDEL Blog: Allan Loudell

Automatic spending cuts almost inevitable; then what?

It's pretty apparent. The two sides are hunkering down.

Other than trying to stop sequestration come March 1st, each side is doing its damnedest to make sure the public blames the OTHER when $1.2 trillion in cuts to defense and domestic spending rip through the economy.

The independent economic group, Macroeconomic Advisers, projects sequestration will cost about 700-thousand jobs and push the official unemployment rate a quarter-of-a-percentage-point higher than it would have otherwise been.

Are you ready for this roller-coaster ride?


Posted at 7:19am on February 20, 2013 by Allan Loudell

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Comments on this post:

Wed, Feb 20, 2013 7:55am

The only upside to the sequestration is that it will include cutbacks of about 13 percent to the Pentagon.

This will help address a bloated defense department budget that is designed for the Cold War era of the 1970s and 1980s. Even the top military generals have said we need to cut defense spending, and that we're spending money on missiles and bombs that we don't need.

Watch for Republicans to try and restore defense cuts by tacking on additional defense spending on to the backside of unrelated bills that pass through Congress.

Mike from Delaware
Wed, Feb 20, 2013 8:07am
It's a shame that members of Congress can't do their job, and instead play games. It's all about who gets the blame.

Term-limits of two terms should be in place. That way, you would eliminate all this entrenchment stuff. A Citizen government, not an elite better-than-the-serfs government that we now have (no matter which party is in control). I believe that was the intention of our Founding Fathers. You'd serve a couple of terms and then go back to your normal life of being a farmer, cabinet maker, etc. Also note, people of all sorts of professions were serving, including doctors and Christian ministers. Today, mostly lawyers; that ought to tell us something about why the government can't get anything done. The profession of double-speak - Lawyers - heh heh.

Wed, Feb 20, 2013 8:34am
Although we crow about cutting the Pentagon's budget, we fail to realize that a lot of that money is a big part of states' economies across this nation. Essentially we are supporting many local economies with flow-thru money that is keeping each base afloat.

Furthermore, it means veterans' benefits are cut to nothing, just as the last troops climb aboard C 17's and land at Dover.

Dover will probably not get deep cuts, because it will be the disembarkation point for those troops coming home. After that however, big cuts should come its way.

It is sad to consider the economy suffering so much because Congress is too rich to tax themselves and those billionaires who could easily cough-up 86 billion without blinking an eye....

The ideal solution is to fund the deficit by taxing the wealthy, and as the deficit closes, let them keep more of their money.

There is no waste in government. All cuts will be to extremely necessary services.

Wed, Feb 20, 2013 8:41am
"Other than trying to stop sequestration come March 1st, each side is doing its damnedest to make sure the public blames the OTHER when $1.2 trillion in cuts to defense and domestic spending rip through the economy."

...and who is ultimately responsible for Sequestration? The president who set up the deal in the first place (even Bob Woodward agrees), but who will ultimately be blamed? The Republicans will, because the press will say so and the public still, for some reason, believe the journOlists. Of course, the Republicans are also doing a great job on their own of destroying themselves so maybe the press is a moot point in this discussion.

Rather than cutting our military...maybe we should just end the TSA and let them be privatized...how many Billions would that save?

And, maybe we can pull ALL our troops home! Not just those in Iraq and Afghanistan, but also those in Europe, Japan and many other bases around the world.

Wed, Feb 20, 2013 9:04am
"There is no waste in government."
Really kavips? You can honestly say and truly believe this?

"All cuts will be to extremely necessary services."
I agree that the necessary services are indeed the ones that will get cut, but there are tons of areas that could be cut and no one would ever notice. The POLITICIANS (on both sides) are playing political chess...our vets, the poor and many others who actually need the govt assistance are viewed as nothing but political pawns. These are the ones who will have their govt checks stopped in order to make headlines and demonize the "mean" Republicans who wouldn't agree to raise taxes "just one more time".

Wed, Feb 20, 2013 11:58am

Sure, Pentagon spending props up economies built around military bases, but this is a matter of principle: If we're looking to cut the deficit,it has to start with the military which is the biggest part of our budget.

Republicans talk a big game about entitlement cuts, but the biggest entitlement is 'defense' spending.

Wed, Feb 20, 2013 1:13pm

The military spending is FAR from the biggest portion of the US budget.

Allan Loudell
Wed, Feb 20, 2013 2:30pm

Earl Grey is correct. I've covered this before.

Allan Loudell

Wed, Feb 20, 2013 7:15pm
It's interesting that you people criticize Congress, when in fact it's the dictator-in-chief whom you call a president that is playing the games.

Wed, Feb 20, 2013 8:00pm
I've been thinking....you know, there's probably going to be a job opening for Obama in Venezuela pretty soon.

Wed, Feb 20, 2013 10:21pm
just to straighten up Allan, Earl Grey and Teatime, the military budget is the biggest part of "..discretionary" spending. Medicare, Medicaid, and Social Security, are bigger, but they are untouchable. Any changes we make now only takes effect far into the future. So where Teatime is correct or not depends upon whether you are speaking strictly of the yearly budget exclusive of entitlements, or the national debt clock.


Wed, Feb 20, 2013 10:46pm
Earl Grey. Discretionary spending is on track by 2014 to be the lowest percent of GDP since Eisenhower. So since we are far bigger and far more complex of a society, I would venture it is a very good bet that there is very little or no waste.

Imagine you trying to make your budget ends meet on a salary of what you made in '62. You also would have very little if any waste left to squeeze..

Everything Republicans cut from here on out, will hurt someone; there is now waste to cut... Only the 1% are immune.

btw, I hope everyone has already moved all their assets out of high risk into secure. If you do it now, you can capture all the gains made since 2009, for we are about to go there again, as soon as sequestration hits...

Just for the record, during the last Great Depression, just after we had two good quarters like this, they did their own version of sequestering, and the stock market dropped 50% within a year.. unemployment which was finally coming down, shot up to 19% and manufacturing fell 37%...


Unemployment never did rebound until the war, despite the $5 billion package Congress had to pass as a boost....

So, friends, get out of the stock market as soon as possible; save your assets.

Wed, Feb 20, 2013 10:49pm
On the Democratic side of the argument since there is 13 trillion in savings owned by the top 1%, taxes to the tune of $85 billion on the top 1% would amount to only an additional penny on every dollar over a million.

No hardship there.

Put in household terms what the Republicans are suggesting, is not that one of our family members goes out to get a new job, ... but live on the income we have, and stop paying our bills....

That is flat out wrong and this upcoming Depression is solely the Republicans fault. Every single bit of it.

Thu, Feb 21, 2013 2:51am
Looks like sequestration is backfiring on Republicans big time...

Bloomberg poll puts Obama at 55% and Republicans at 35%.


America must get rid of the Republican party to before we can begin to rectify our economy and bring jobs back, but it is a shame we have to go through sequestration to achieve it...

Pulled from one of the pollers... “The Republicans are not offering any new solutions,” said poll independent who lives in the St. Louis suburb of Greendale, Missouri. “Their answer is always tax cuts and incentives for business. I’ve never heard them say anything innovative to spark the economy that would help the other 85, 90 percent of people that have to deal with the economy as it is.”

Thu, Feb 21, 2013 3:00am
A more recent CBO estimate that just came out says... "the measures would reduce economic growth by 0.6 percent this year, enough to eliminate 750,000 jobs."


Thanks Republicans.

btw. Delaware Liberal blog has 15 Republicans gloating about the sequester coming into effect and the hardships it will cause normal Americans. If you are a solid Republican it will cause you to change your party registration immediately, so I would not recommend you see it. But if you are a Democrat or Independent, it is a must read.


Unbelievable how these guys are laughing and joking and hee-hawing at putting 750,000 families out of work....

Thu, Feb 21, 2013 4:02am
No. Thank YOU Obama.

Thu, Feb 21, 2013 7:08am
And you expect me to believe ANYTHING Delaware Liberal has to say? When you put together the first two letters and the fourth letter of the word liberal, you get LIE!

Thu, Feb 21, 2013 7:26am
Oh, and just one more thing (as Columbo would say). Let us not forget the biggest lie of all: It's BUSH's FAULT!

Thu, Feb 21, 2013 8:09am
Pulled from one of the pollers... “The Republicans are not offering any new solutions,” said an independent who lives in the St. Louis suburb of Greendale, Missouri. “Their answer is always tax cuts and incentives for business. I’ve never heard them say anything innovative to spark the economy that would help the other 85, 90 percent of people that have to deal with the economy as it is.”

Guess that pollster hadn't heard about the Republicans being for the Keystone Pipeline...and against govt.-funded boondoggles like Solyndra (bankrupt), battery maker A123 (bankrupt) or Fisker (possibly being bought out by same Chinese company that bought A123).

"Resist we much"...~Al Sharpton

Mike from Delaware
Thu, Feb 21, 2013 8:14am
Mrpizza: Come on, give us a break. Some of our problems WERE Bush Jr.'s fault. He got us into two costly unfunded wars that also were very deadly to both our people and the local residents. Like it or not, that was Bush's fault.

Second, the first three letters in Conservative are CON so are they giving us a "con" job?

Neither side is totally correct and neither side is totally wrong. Neither side is evil, they just see it from a different perspective.

Take a wedge of swiss cheese. You and your conservative friends are sitting on one side of the wedge; you see 3 holes in the cheese. The libs are sitting on the opposite side of the wedge and see 5 holes. Both are correct in what they see. The problem is neither sees the big picture.

So to better do this, try rotating the plate so that you can see their side of the cheese [see where the libs are coming from, just as libs should try to see where the conservatives are coming from]. Then try to meet in the middle so that both get something, because gridlock is not the answer. We've got real problems and if we don't fix them, they'll bury us. With the nation pretty much equally split between libs and cons, this is how we should proceed as neither side truly has a mandate from the people.

We should be trying to take the best of both views and using them to make our nation stronger, and more economically viable, etc., etc.

This isn't a football game. This is real life. Real people can and will be hurt if we don't pull our collective heads out of "the place where the sun don't shine" and start fixing problems in a way that benefits all Americans, not just the wealthy and special interests groups.

Thu, Feb 21, 2013 3:19pm
Keystone... i thought it was common knowledge but from Earl Gray's comments I wonder if not everyone is aware of this?

The entire Keystone Pipeline concept was to move Tar Sands crude overseas. It is not for domestic consumption. It is to supply Europe, South America, and Africa, that investors are pushing for this pipeline which will end right at "tanker row" in the Houston-Galveston Canal.

Of course they ply upon the fears of Conservatives to politically gain support for this project (who wouldn't), but if you read the prospectus documents from Trans Canada Pipeline you will see that exporting tar oil for top dollar, instead of selling it cheap to a US fracked-down price of petroleum, has always been their principle aim.

And if oil is being sold at higher prices overseas, guess what that will do to oil prices here, since oil is a global market?

You have two choices. It will a) .. raise oil here, or b) the price will continue to remain right where it is right now....

It is no different than Gasprom building pipelines into Europe to sell natural gas, and (surprise to no one) the price of gas to Russians themselves, rises because there is too little supply for both Europe and Russia.

As we see, the rail pipeline that supplies this high tar crude to Delaware City, is sufficient.

Just wanted to make sure all knew that this idea that Keystone would lower gas prices for America, or even be used for American consumption, was debunked during the past campaign...

I forget when and where the reference is, but if you trace Romney's speeches, that point at where he totally stopped mentioning Keystone Pipeline entirely, is the timeline when this news that Keystone was for foreigners, broke out...

Mike from Delaware
Thu, Feb 21, 2013 6:50pm
Kavips: Thanks for this info. I didn't know that about the Keystone pipeline issue.

I had heard discussion, during the election, (maybe I just didn't link it with Keystone) about why even if the US increased petroleum production or refining that the product wouldn't be sold here, but shipped via tanker overseas, because they can sell it for a far higher price there than here. So what you're saying also makes sense and I just hadn't linked to the two together, so thanks for helping put the two together.

So the GOP/TEA folks can say that by Obama not allowing the Keystone pipeline in America would keep jobs in shipping petroleum from Texas to wherever from being in Texas and instead being located in Canada. So there is that impact on American jobs, but definitely nothing like what as most on the right are claiming.

Thu, Feb 21, 2013 7:08pm
Mike: I'd really like to believe what you're saying, but I think you're too optimistic about liberals. The left's favorite tactic is to use children, the poor, the military, and anyone else in an unfortunate situation as stage props to make excuses for bigger and bigger government. Granted there are some on the left that find Obama to be scary as I do, but
do they dare step out of line with Dirty Harry and Nasty Nancy?

I can only hope you're right about rotating the plate, but I think libs, especially Obama, will take a mile for every inch given.

By the way, he did get some of his tax increases on the wealthy.

Thu, Feb 21, 2013 8:45pm
Mike: I wouldn't so quickly believe kavips on this one...do your own research and see who's telling the truth.

Mike from Delaware
Thu, Feb 21, 2013 10:57pm
Mrpizza: you mention there are some on the left who don't agree with Obama, but don't have the "guts" to step out of line with Harry Reid or Nancy Pelosi.

My reply would be, isn't there those in the GOP who may not agree with the TEA folks, but have made a pledge to Grover Norquist for over 20 years to not vote to raise any taxes. They march in lock step with Grover so that he won't put up money for a challenger to that person's seat in Congress. Talk about not having any "guts" or convictions that they'd allow some rich dude who'd not even been elected to dictate to them how they should vote. To the point that the GOP Prez candidates in the debates pledged right on national radio/TV that they'd still vote against any tax increase even if it was $10 dollars of cuts for every $1. dollar of tax increase. Now THAT's stupid, and its that kind of stupidity that lost the GOP the 2012 election for Prez.

There was an example of the GOP not looking at the other side of that wedge of cheese. They insisted that the only correct view was THEIR side of the cheese. That sort of thinking cost them the Presidency in 2012. The my way or the highway approach gets old after awhile and many people have had enough of it. The GOP loses when they start trying to strong arm the DEMS into doing their will. DEMS will compromise, GOP used to do this, but no longer so the GOP comes across as the party of we'd rather see the nation fail than to allow the DEMS to have it their way, even though the DEM's guy won the election. So many see the GOP/TEA party as the party of NO. Not an appealing image.

EarlGrey: I checked a bunch of news articles from all sorts of news sources. All mentioned the issue of the crude or refined Diesel being exported overseas. This one explained it quite well:

"The midwestern United States has long used Canadian oil (also referred to as Canadian Sour, which describes its quality, as sour crude is more difficult to refine and not as desirable as the light sweet crude oil that virtually any refinery can process). Refineries in the Midwest are nearly all capable of processing this oil—which takes special equipment to refine. Since not all refineries can process this oil, the price for it is comparably lower than higher quality crudes. The fact that Canadian oil can't leave Canada or the United States also keeps the price lower. By keeping Canadian oil off world markets, demand for it stays lower, which keeps the price for it lower. By connecting Canadian oil to the Gulf, there is the distinct and likely possibility that Canada will begin exporting this type of crude oil, which would open the possibility for international buyers, thus increasing demand for Canadian Sour, and causing the price to rise. This is exactly why Canada is pushing so hard for this pipeline--the more potential buyers, the more demand, the higher it can be sold for. This is bad for American and Canadian motorists."


Fri, Feb 22, 2013 1:20am
And this may be a big story tomorrow. But Bloomberg again (is he running for something?) does an analysis on the Big Banks that got bailed out but the billions of dollars they allegedly earn for their shareholders were almost entirely a gift from U.S. taxpayers...


Apparently the subsidy lowers bank borrowing costs by 0.8 of a percent. They are so big that this tiny percentage nets them $83 billion a year. The government is giving banks 3 cents of every tax dollar it collects. We are funding our government with 97 cents of every collected dollar and the remainder is transfered into the vaults of the big banks.

Without the subsidy the big banks would be barely making a profit, or barely losing one. Every bonus pocketed by every bank executive, is courtesy of us and the IRS...

Breaking apart the banks, as in a Teddy Roosevelt trust busting scheme, would improve efficiencies inherent in a gigantic unmanageable conglomerate and negate the needs for this 0.8% subsidy.

It is ironic that the yearly cost of this subsidy is exactly almost the same amount we are short on the sequestration, for which Obama wants additional revenue, and the Republicans want additional cuts. We could simply kill this subsidy and let each bank's investors support their "too big to fail banks"...

Mike from Delaware
Fri, Feb 22, 2013 8:09am
Kavips: Sounds interesting. Would need to know more and what affect these banks going belly up, which I assume would be the end result, be on ours and the world economies.

The adverse affect on ours and the world's economies were supposedly the reason for both Bush Jr. and Obama bailing out the banks.

Fri, Feb 22, 2013 9:25am
The good, the bad and the ugly on Keystone XL:

Mike from Delaware
Fri, Feb 22, 2013 12:02pm
EarlGrey: Thanks, that link also was interesting.

There seems to be good and bad connected with this pipeline. I think the key point though is this pipeline won't cause US gas prices to necessarily drop, which is what I believe most folks are interested in. Most will probably be sent overseas.

Yet on the other hand, I see no reason to not build the pipeline. The question I have is what is the record of those other pipelines the article refers to in terms of leaks and environmental problems since they were built?

I've not heard of any in the media, doesn't mean I didn't miss it, but I'd have thought the opponents would have cited those problems as examples of why the Keystone XL pipeline shouldn't go in. So since that doesn't seem to be the case, that implies that if done correctly, etc, the Keystone XL shouldn't have any real negative affect either in terms of environmental issues due to a leak.

The environmentalists just don't want ANY thing new with petrochemicals to be developed forcing us to use wind/solar/geothermal, and that at this point in time is not realistic.

Sat, Feb 23, 2013 1:17am
MFD: The GOP is only the party of no to those who are addicted to big government. The GOP is the party of LIMITED government. As long as the left continues to project the illusion that things are "free" (as in handouts), then they'll continue to vote for the lie.

Mike from Delaware
Sat, Feb 23, 2013 9:14am
Mrpizza: I can agree that there are some of the things government does that need to be changed or updated. The GOP wants to just cut deeply without regard to what they're cutting or who they're hurting.

Maybe YOU don't need YOUR Social Security benefit or will not need your Medicare benefit, but most of us will. I have NO problem if the GOP wants to change the plan for those 50 or younger, but for those of us who are older it is too late, to change the plan.

Yet not since the election, have I heard the GOP say we want to change the Social Security plan for those under 50. Instead they're NOW saying we've got all those Baby Boomers who are going to be going on Social Security and we need to stick it to them by raising the age they can retire and cut the benefit they'll get even though they've been paying faithfully into the system for 45+ years. They played by the rules, but too bad for them.

When I hopefully retire at age 66, in just over 4 years, [assuming the GOP isn't successful in sticking it to me] I'll have paid full time wages into the plan for 47 years. So I don't consider myself to be a taker, no matter what Mitt Romney says. Please understand, THAT'S NOT a GOP platform I can support or endorse.

Medicare and Social Security are not handouts or "free". Each person who works and gets a paycheck pays into both the Medicare system and the Social Security system.

Some folks, through no fault of their own, do need help from the government such as poor children. It's not their fault their parents are deadbeats. So why punish a child and take away the School Breakfast/Lunch program, just so some rich guys won't have to pay a dime more in taxes?

Granted there are plenty of other things that can and should be cut or even eliminated completely, but naturally the Congress, especially the GOP, want to go after any and all of the social safety net programs that help the little guy. Not what I'd call a "family value" or what Jesus would do.

I could really get behind a GOP that advocated cutting military spending and allowing some of these other wealthy nations to provide their own defense forces. Cutting the foreign aid other than food, clean water, and medical help. Cutting benefits, perks, staff, etc, for Congress. Eliminate funding to PBS/NPR, the Endowment for the Arts, etc, etc. Declare the federal employees to be "right to work" folks and then lay off all fed employees say on Monday and hire the real amount needed to do the job with no union. Offer these "new" employees benefits like what the rest of us get. You get the idea. How dare those pompous asses on Capital Hill say we're takers and want handouts, etc, when it is they who are sucking from the tit of the federal government in a real serious way, what hypocrites.

We'll just have to agree to disagree on this one.

Sat, Feb 23, 2013 2:48pm
MFD: The only thing I would disagree with you on here is the issue of who the pompous asses are, which are the donkeys and not the elephants.

Mike from Delaware
Sat, Feb 23, 2013 5:00pm
Maybe we can agree that there are pompous asses on both sides of the isle, and some decent folks who do care about our nation [even though they may not agree on how to fix our problems] on both sides of the isle.

Sun, Feb 24, 2013 3:48am
Hmmmmmmm. Maybe. But who would they be?

Mike from Delaware
Sun, Feb 24, 2013 9:02pm
Mrpizza: We don't need to name folks on either side, but it is enough to be able to acknowledge that both sides of the aisle have folks within their ranks who are pompous asses.

It also should be possible for us to agree that neither side of the aisle is correct 100% of the time, or wrong 100% of the time. Granted, we might favor one side more than the other, but that doesn't mean the other guys are wrong all the time. Even a broken clock is correct twice a day.

The only one perfect is our Lord and Savior Jesus Christ. Even our churches are not perfect or correct 100% of the time, as they too are run by flawed humans who no matter who all fall short of God's glory. So how can one believe a political party can be correct 100% of the time? That's an impossible standard to hold either DEMS or GOP to meeting.

So it seems, to me, we should be able to agree with these things.

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