Memo to the Media: There Is no Fiscal Cliff -- Stop Calling it That!
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SC: Yeah it’s about 1 percent and the average American thinks it’s 26 percent. The other thing people say is let’s just cut waste, fraud, and abuse. Remember you have a deficit of about $1 trillion, which is roughly 25 percent of the budget. So unless you’re willing to find whole areas of government activity wasteful, fraudulent, or abusive, which no one is, you can’t do this on the spending side. There’s going to have to be a revenue component to any deficit reduction plan. That’s the only way it’s ever going to happen.
JH: And that’s why we keep bumping into this brick wall with the Tea Party caucus in the House.
Let’s talk about the military spending side of all of this. One of the great ironies is that the conventional wisdom among Republicans is that public spending does nothing to foster private sector growth, but the one exception seems to be with military spending. Then everyone becomes kind of a Keynesian economist all of a sudden. Put these defense cuts into context. How much does it really add up to? What kind of programs are on the chopping block?
SC: The CEOs of a number of major defense contractors were up on Capitol Hill this past week talking about how much damage that will do; how many people they have to lay off. First off, you shouldn’t say anything is “only” $60 billion. But while that is not an insignificant amount, it is only $60 billion – that’s roughly about 8% cut from programs.
JH: That’s 8 percent of the defense budget, not 8 percent of the federal budget.
SC: Yes -- of the defense budget. The problem is we don’t really know where those cuts are going to come from. The administration, which is not required to tell anybody yet, hasn’t told anybody yet. That’s one of the things that the contractors were saying. Republicans actually passed legislation in the House saying it can only take 30 days. The reason they want to do that is to put political pressure on the White House, to see what they want to cut. But the White House is doing what it’s allowed to do under the Budget Control Act, which is wait until they absolutely have to decide which cuts to make. I can tell you that the overwhelming likelihood is that personnel -- salaries of people in uniform -- will be spared, which the President is allowed to do. That’ll put some pressure on defense contractors.
We’ve been told by Republicans we need to cut spending. That’s the way to economic growth. And here’s a proposal to cut spending and they’re trying to stop it because it’s going to hurt the defense industry and require that jobs be eliminated at Lockheed Martin and General Dynamics. This is typical of the kind of two-faced, schizophrenic nature of the Republican position on the budget. On the one hand they say spending cuts don’t matter, that they will actually help the economy. On the other hand they’re saying it’ll hurt the defense establishment if you cut spending. You can’t have it both ways.