Automatic Spending Cuts
photo by flickr user The White House
By Nate Stein
Automatic spending cuts have recently been put into motion. Congress has failed in its efforts to negotiate a budget, so now domestic program spending is to be cut 5% and military spending is to be cut 8%. This is the latest development in what seems to be an eternal standoff between Republicans and Democrats. Speaker John Boehner has repeatedly argued against any new tax increases, citing President Obama’s recent victory in the tax increase realm. Both parties lose in this last battle, as neither party wants to have the automatic cuts. Obama is currently meeting with Speaker Boehner, Senate Minority Leader Mitch McConnell, Majority Leader Harry Reid, and House Minority Leader Nancy Pelosi to discuss a possible compromise. However this seems unlikely, judging from Republicans repeated opposition to any last minute deals. “The American people simply will not accept replacing spending cuts agreed to by both parties with tax hikes” states Senate Minority Leader Mitch McConnell
The numbers show the true damage of the automated cuts. 750,000 jobs are predicted by the federal government to be cut due to the cuts. The IMF, or International Monetary Fund, has predicted the U.S economy’s growth to be cut by a half a percent. This will cause international impact, which is not helpful to our allies in Europe. Europeans already face strict austerity measures; any outside impact could prove highly damaging to the European economy. The US cuts equal almost $85 billion dollars, nowhere near the $16.6 trillion our debt has grown into.
The Democrat solution is to ease the debt with a combination of tax increases and spending cuts, raising taxes on the higher earners. The justification is both the deficit and how taxes are the lowest they have been in years. Republicans argue for social welfare service cuts. The Republican party also does not want to touch the military, which has the largest budget of any branch of the economy. Whichever party is correct, this much is certain: the economy will suffer if no action is taken.
The spending cuts have already been put into effect, however these cuts can be stopped by Congress and the white house. Republicans have seen automatic cuts as a terrible thing because of the military cuts, however now they view them as a means of reducing government spending. Democrats also want to shrink the deficit, but want to negotiate in order to help people that need federal aid. It is unclear when Congress will reach a compromise, but learning from past political disputes we can be sure any agreement will be hard fought.