September 23, 2012
The Washington Post has long felt that the distinction between news reported and editorializing was outdated. Hence it had no compunctions about running a piece on the budget that begins:
“Senior Republicans say they will be forced to retreat on taxes if President Obama wins a second term in November, clearing the biggest obstacle to a deal with Democrats to defuse a year-end budget bomb that threatens to rock the U.S. economy.”
Wow, a year-end “budget bomb” that threatens to “rock” the economy, that sounds pretty serious. In reality what we are faced with is a situation where taxes will be deducted from paychecks at a higher rate beginning in January and roughly $110 billion in spending reductions will begin to go into place.
If nothing is done by year-end what happens to the economy? Pretty much nothing. If Congress still doesn’t do anything for the month of January, so that everyone starts to see larger deductions from their paycheck and government spending is also reduced, then we will start to see a drag on the economy. If Congress does nothing all year, then we would see a serious hit to the economy that would likely throw us back into a recession, as the Congressional Budget Office and others have projected. However this story of slowly strangling the economy, as the Conservative government has done to the U.K. and the European Central Bank is doing to the euro zone economies, is not quite the story of a “budget bomb.” or at least probably not to people who don’t work for the Washington Post.
The Post also warned that the $55 billion in cuts that would hit the military would “whack” the defense budget. No doubt the paper feels strongly about protecting the defense contractors who advertise in the paper, but there is no obvious reason that the $55 billion in military cuts in any sense involve a greater “whack” than the $55 billion in cuts that will hit domestic discretionary spending at the start of the year.
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