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Spending cuts seem here for good

By Phillip Elliott

Associated Press

POSTED:
LAST UPDATED: 11:17 a.m. HST, Mar 03, 2013


WASHINGTON >> The spending cuts are here to stay if you believe the public posturing today.

The Senate's Republican leader Mitch McConnell called them modest. House Speaker John Boehner isn't sure the cuts will hurt the economy. The White House's top economic adviser, Gene Sperling, said the pain isn't that bad right now.

So after months of dire warnings, Washington didn't implode, government didn't shut down and the $85 billion budget trigger didn't spell doom. And no one has a tangible proposal for rolling back those cuts.

"This modest reduction of 2.4 percent in spending over the next six months is a little more than the average American experienced just two months ago, when their own pay went down when the payroll tax holiday expired," McConnell said.

"I don't know whether it's going to hurt the economy or not," Boehner said. "I don't think anyone quite understands how the sequester is really going to work."

And Sperling, making the rounds on the Sunday news shows, added: "On Day One, it will not be as harmful as it will be over time."

Both parties cast blame on the other for the automatic, across-the-board spending cuts but gave little guidance on what to expect in the coming weeks. Republicans and Democrats pledged to retroactively undo the cuts but signaled no hints as to how that process would start to take shape. Republicans insisted there would be no new taxes and Democrats refused to talk about any bargain without them.

"That's not going to work," said Sen. Kelly Ayotte, R-N.H. "If we're going to increase revenue again, it's got to go to the debt with real entitlement reform and real tax reform when you actually lower rates. ... I'm not going to agree to any more tax increases that are going to go to increase more government."

All of this comes ahead of a new, March 27 deadline that could spell a government shutdown and a debt-ceiling clash coming in May.

Boehner said his chamber would move this week to pass a measure to keep government open through Sept. 30. McConnell said a government shutdown was unlikely to come from his side of Capitol Hill. The White House said it would dodge the shutdown and roll back the cuts, which hit domestic and defense spending in equal share.

"We will still be committed to trying to find Republicans and Democrats that will work on a bipartisan compromise to get rid of the sequester," Sperling said.

Obama has phoned lawmakers but it isn't clear to what end. Boehner and McConnell said they had a productive meeting with Obama on Friday, but it didn't yield a deal.

"Well, no one can think that that's been a success for the president," said Mitt Romney, Obama's unsuccessful rival in November's election. "He didn't think the sequester would happen. It is happening."

Obama and the Republicans have been fighting over federal spending since the opposition party regained control of the House of Representatives in the 2010 midterm elections. The budget cuts were designed in 2011 to be so ruthless that both sides would be forced to find a better deal, but they haven't despite two years to find a compromise.

The $85 billion in cuts apply to the remainder of the 2013 fiscal year, which ends Sept. 30. But without a deal they will continue slashing government spending by about $1 trillion more over a 10-year period.

McConnell spoke to CNN's "State of the Union." Boehner was interviewed on NBC's "Meet the Press." Sperling appeared on ABC's "This Week," NBC and CNN. Ayotte appeared on ABC. Romney was a guest on "Fox News Sunday."







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MolokaiChuck wrote:
The Ka-Boom will come...give it time!!!!
on March 3,2013 | 08:54AM
Maneki_Neko wrote:
Here is a little nugget of fact:

There are 2.7 million fewer private sector jobs now than when the recession started back in 2007. Yup, over 5 years and we have fewer jobs now. Maybe Barry and the Congresscritters could get together and focus on that for a minute. You know, do their job.


on March 3,2013 | 09:21AM
allie wrote:
Has more to do with structural change in the international and national economy than the weak-kneed Obama.
on March 3,2013 | 09:54AM
aomohoa wrote:
Of course. Obama is only interesting in creating bigger government and more civil servant jobs. More bureaucracy and less efficiency. He created many useless job that didn't nothing for the economy.
on March 3,2013 | 11:29AM
Maneki_Neko wrote:
To be fair, government employment under Obama has dropped significantly. The issue is private sector where there has been consistent growth since 2010 but the number of jobs added is anemic and nowhere near the 300,000 - 400,000 per month that we need to fully recover. What the Obama policies have done is drive down the number of folks who are looking for work and has let many disappear from the labor market as the unemployment benefits end. The problem is bad policy, not bad person.
on March 3,2013 | 12:39PM
McB0B wrote:
The number of federal employees has risen under President Obama. There were 2,790,000 federal workers in January 2009 when the president took office, and now there are 2,804,000 workers. The fact is that there is no month during President Obama’s term when the federal workforce was smaller than it was in the first month of Mr. Obama’s presidency. The president took over in January 2009. Every month after January 2009 has seen more federal workers than were employed in January 2009.
on March 3,2013 | 02:46PM
Maneki_Neko wrote:
Cherry pickin'. I specifically said "government" meaning public sector, employment not exclusively Federal. Lots of shiftiness between government levels.
on March 3,2013 | 04:40PM
McB0B wrote:
In a discussion about cuts in the federal budget it's more than a little bit ridiculous to claim that using the number of federal employees is cherry picking because you'd prefer to count the people employed by entities not subject to the federal budget. It's like saying you've got more money to spend because your neighbor got a raise.
on March 6,2013 | 05:43PM
Pocho wrote:
About time the Govenment start to cut back spending. China practically owns the US
on March 3,2013 | 09:25AM
nodaddynotthebelt wrote:
These politicians must not have taken economics in college because they sure are oblvious to what's coming. It is not going to come to fruition overnight. But it will happen. It will be gradual but it will hurt the economy. What they fail to tell you is that federal government workers who do an important job to keep our military and other services going will be taking a huge 20 percent pay cut in the form of furloughs. And that is on top of the raise in the social security payroll increases. These workers will, as a result, will be consuming less which means that our businesses will see a reduction on revenues, which in turn will result in, yes, lay offs of even more workers. As more workers are laid off we will spend even more on unemployment and the unemployment rate will take another hit. The Republicans must be celebrating their ill-gotten victory which they probably believe will help them to gain power in Congress and ultimately the presidential office. Further, it helped to save themselves from having to pay more in taxes personally as tax loop holes which they depend on will remain open to boot. They have achieved something even greater as they managed to bump the tax bracket away from those who make more than $250,000 (their income) to those that make more than $450,000. At the same time, Obama has not presented to us the leadership needed to fix the problem between the Republians, who by virtue of creating a stalemate are winning by destruction, and the Democrats, who are left with no leadership to come up with a solution. That leads me to what I have stated before that the party system is more destructive to our government than a way for a checks and balance. How many times do we have to experience this kind of beauracracy where parties use the platform to fight each other in order to gain seats at the expense of the people. The party system may have served its purpose in the olden days when politicians did not have an easy way to advertise what he stood for. Today, with our media and communications, we can see what each politician stand for. This polticial wrangling will take its toll when you see the economy tank even further and the Republicans will be blaming Obama for something that they helped to create. How insidious is that?
on March 3,2013 | 09:28AM
Pacej001 wrote:
Think you missed something re taxes. Both Obamacare AND the January tax increase jacked up taxes on those making more than $250K. There are 21 taxes in obama care, for example the 2.3% tax on GROSS sales of medical devices. That's on gross sales, not a tax on profits. It's a big tax that will affect all of us by raising the cost of medical care.------------------ As to the economic impact, how is it that these piddly sequester cuts have significant economic impact, and the money extracted from the economy by Obamacare and the latest tax increase don't. Doesn't make sense.
on March 3,2013 | 09:51AM
bobbob wrote:
yeah, basically like a GET tax slapped on med devices.
on March 3,2013 | 11:06AM
mcc wrote:
Cutbacks started a long time ago with the teachers who still have furlough days.
on March 3,2013 | 11:30AM
st1d wrote:
cutbacks started in private and government sectors way before teachers were finally brought into the program.

and, don't forget it was the teachers themselves that decided to turn their backs on the children by selecting instruction days to take off as furlough days.


on March 3,2013 | 02:43PM
HD36 wrote:
The problem with your analysis is that you assume that larger government is good for the economy. Government is borrowing 40% of everything it spends already. The larger the government, the more resources and capital get sucked into it and the larger our trade deficit grows. The Federal Reserve has no exit plan to sell their Treasury Bond holdings that they have bought to loan the government $85 billion dollars per month. They are buying 90% of long term bonds right now. Basically the buyer of last resort. These loans just don't dissappear. At some point they will either mature or the Fed will sell them. The economy is running on historically low interest rates. Cheap money is the only thing propping up this economy right now. Savers are getting slaughtered. When creditors realize they aren't going to get paid back with dollars that have the same purchasing power, the ponzi schem is up and the economy goes into a free fall. Drastic cuts need to be made but politicians don't have a clue.
on March 3,2013 | 06:44PM
mimital wrote:
I still don't understand why congress and the president aren't taking cuts on their pay. I work in health care and will be furloughed once a week. I make about 1/10 th of what they make and I have a mortgage and bills also. They should set by example instead of saying they are so important they cannot be furloughed or take a pay cut. No one is indispensable!
on March 3,2013 | 09:31AM
serious wrote:
OH! I understand completely--you see our representatives put in a law that their salaries cannot be changed during their term. They also can't have the same retirement "benefits" and "health" care that ordinary people have--it's the law that they passed. When they had a massive salary increase years ago they put in a double negative so that every rep can say they voted against their increase. Is this a great country or not??? THEY also have complete immunity for whatever they say in committee or on the floor. I am an R, but it doesn't matter--they are what they are--Obama has split the country into the haves and have-nots, the Congresses have split the country between THEM and US.
on March 3,2013 | 10:02AM
stingray65 wrote:
Congress, just give themself a pay raise!! Do you think they care about your mortgage, bills to pay? Look what is happening in own State of Hawaii. The worst has yet to come. Domino effect with our economy, unemployment and others. Next will be the Federal Worker in all Military Bases. How unemployment insurance they have to provide the unemployed? You think that pony tail governor can do something. Or Caldwel?
on March 3,2013 | 10:29AM
aomohoa wrote:
They don't care about representing us, they care about the perks that come with their job.
on March 3,2013 | 11:32AM
cojef wrote:
The perks do not come with the job! They created the perks.
on March 3,2013 | 02:04PM
aomohoa wrote:
How about they also cut their expensive accts and free travel.
on March 3,2013 | 11:31AM
haleiwalad1 wrote:
wow, that was underwhelming! Much like most things over exaggerated in the press. The popular media, including newspapers have shown themselves to be less and less reliable and factual and more and more emotionally-charged and full of hyperbole. Politicians and most US media are a poor source of getting what's REALLY going on in the newsplace.
on March 3,2013 | 09:54AM
hikine wrote:
I agree. The Obama Administration plays on people's emotions rather than fact. This is akin to where the world would end when the computers around the world would shut down in 2000 and 2012! Obama is arrogant when it comes to spending and he believes funding is unlimited. Why do you think Obama raised taxes and wants illegals to be legals, because he wants to make sure he can tax more people thinking that they will get jobs when they become citizens. If Americans can't find jobs now what makes him think these future citizens will have better luck? What he should do is to stop spending billions of dollars in countries that don't want us there such as Afghanistan. As a matter of fact why are we still there?!
on March 3,2013 | 11:06AM
bobbob wrote:
that's the way they've always been. Send the hype to the moon to get higher viewership, then downplay it after.
on March 3,2013 | 11:07AM
aomohoa wrote:
Just like Y2K. The world didn't end then either.
on March 3,2013 | 11:34AM
onwardupward wrote:
This comment has been deleted.
on March 3,2013 | 11:52AM
Pacej001 wrote:
Did you miss the January tax increase? Rates up on those making over $450K, investment taxes raised on those making over $250K. This is on top of significant tax increases in Obama care on those making over $250K. Now, Mr. Obama is attempting to wedge another tax increase into the sequester negotiation. This is known as negotiating in bad faith since the sequester is entirely about spending cuts, no mention of taxes.
on March 3,2013 | 01:43PM
jussayin wrote:
Same story for the last several years. Gridlock. If this was a football team, company, etc., you would hold the head coach, CEO, big boss, PRESIDENT accountable for not being able to reach compromise.
on March 3,2013 | 12:27PM
NITRO08 wrote:
Don't blame one ,blame all even if Mitt won same results!!!!!!!!!!!!!!!
on March 3,2013 | 01:59PM
Oahuan wrote:
Good. We need a sequester to stop the democrats from spending. I hope it last all year long.
on March 3,2013 | 02:20PM
st1d wrote:
it doesn't stop the spending, it merely reduces the increases to what spending is already going on and will continue on.
on March 3,2013 | 02:47PM
hawaiidreaming50 wrote:
I have a government job and it doesn't pay that good. Last year I made around $34,000. This sequester will essentially cost me a month's salary. Blaming Obama is not the answer. Blame the politicians in DC who have been wasting money all these years. I am about to retire and the last thing I want touched is Social Security which I have been contributing to for 40 years plus. The tax code is totally whacked out and needs reformed. Yes some cuts are needed but not the way the Republicans want. And additional taxes are not the the answer either. So while all you out there want to bash The Prez I will be sitting here trying to figure out how to pay my bills on less income. How many of you are going to be in that situation with a month's less pay?
on March 3,2013 | 04:30PM
HD36 wrote:
Get ready for an even bigger pay cut that will effect everyone. I'm talking about inflation. When everything goes up 15%, and your pay stays the same, you've just taken a 15% pay cut. Depending on how much you make, it affects the rich much less of course. The Federal Reserve is monetizing the debt to the tune of $85 billion a month. By definition, an expansion fo the money supply is inflation. There is usually a lag time of a couple years, until the velocity of money starts accelerating but it happened in exactly the same way as in Argentina, Brazil, Germany and Zimbawe.
on March 3,2013 | 07:15PM
sailfish1 wrote:
We actually need more spending cuts especially in unneeded government programs and employees. The defense budget is way too big - we don't need more submarines, aircraft carriers and military bases all over the world. Spend smart not more!
on March 3,2013 | 04:12PM
HD36 wrote:
Very true and then the government wouldn't have to borrow $85 billion dollars a month from the private bank known as the Federal Reserve. If interest rates rose to a historical mean, the government would be spending 100% of its revenues on only the interest payments on the $16.5 trillion dollars it owes.
on March 3,2013 | 07:52PM
ufried wrote:
don't let the facts get in the way of a good crisis! still trying to understand how not spending money you don't have, is bad! Breaking news; detroit,mi. is officially broke and requesting a bailout...
on March 4,2013 | 05:56AM
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