Following the fiscal cliff hostage crisis of 2011, where a newly minted Republican House majority threatened to default on America’s debt, they and the President agreed on a series of punitive fiscal measures which were supposed to kick in should both sides fail to reach an agreement on the budget. This is what has become known as “the sequester” Since they have not been able to agree to a budget since that time, the sequestration has effectively become the budget, making this a de facto Republican victory due to the lower spending.
Since President Obama got re-elected, he has had one or both chambers of Congress under Republican control and while he has sought to build foreign policy legacies with Iran, a disastrous trade deal known as the Trans-Pacific Partnership (described by critics as NAFTA on steroids) , and also climate change, he has shown little to no appetite for the kinds of showdowns over the budget that marked his first term. With no one to challenge the sequester, it has therefore become the norm.
Enter Bernie Sanders, who is the Ranking Member of the Senate Budget Committee. He used his position to request of the Congressional Budget Office to estimate what impact if any there would be if we eliminated the sequester, and used the extra funding towards job creation programs. Turns out, the difference would be significant. Over the next two years, the CBO estimated we could add as many as 1.4 million jobs. Furthermore, that spending alone would be a boost to the economy to the tune of 0.6% of our GDP in 2016 and another 0.4% in 2017. What about the deficit? Given the increase in revenue from payroll and income taxes from the newly employed people, combine with the higher revenue of the overall growth of the national economy, and the difference would be negligible, especially when you express the debt in terms of % of GDP, which is the most reliable way to look at debt. After all, what if you are $20,000 in debt? It doesn’t tell you anything about your finances, unless you know how much your income is. A Person making $30,000 a year has quite a load carrying $20,000 in debt, but a person who makes $2 million has no problem at all.
Is anyone besides Bernie bringing this up? Of course not. For the Republicans any jobs program has been a non starter since the recession (and Obama’s term) began. Meanwhile, President Obama has made a significantly more modest request to increase domestic spending by $37 billion, about a third of the sequester cut, but he has also requested $38 billion more in defense spending. You can imagine which of these two the GOP congress will accept.
I understand that the President can’t appropriate this money alone without Congressional say so. However, the President hasn’t bothered to even campaign to try to convince the American people and put some pressure on Congress. If it hadn’t been for Bernie, no one would have even bothered to do the analysis and discover we could get hundreds of thousands of new jobs. The President, along with other Democrats, seemingly accept the Republican mantra that small deficits are more important than growing jobs and thus increasing median wages, which has never been and will never be a recipe for a healthy economy. It’s why median income hasn’t grown under the Obama administration. Hopefully this election brings forth a Democratic candidate who will highlight the importance of job creation, and no one has so far brought more attention to that issue than Bernie’s campaign, which has been consistent on using federal funds to create jobs.