Sequestration In America, Dancing On Wall Street, Pain In Maryland And Virginia

As I write this on Tuesday, the Dow-Jones Index has hit an all-time high. It’s historic! Higher than the last record, set in 2007.

Sequestration, which I call Austerity, took effect on Friday.

Devastating economic pain is predicted throughout America, although some exaggeration is baked into the “sky-is-falling” rhetoric.

Exaggeration or no exaggeration, economic growth has been sluggish. Sequestration of $85 billion in federal spending will slow the economy even more.  Unemployment will go up. Government workers will feel the pain directly in the form of furloughs or layoffs. It’s possible the U.S. economy could fall back into recession.

Perhaps the economic pain will be felt most acutely in my home state of Maryland and in neighboring Virginia. The economies of Maryland and Virginia are heavily dependent on government spending, either directly or through government contracting. But a large part of that spending is defense spending and military contracting, which I believe must be brought under control. I see no justification for protecting defense spending for the parochial interests of Maryland and Virginia.

Europe is in recession, with austerity taking its toll in many places. The future of the Euro and the European Union is uncertain. Unemployment is rampant in Greece, Spain, Portugal . . .

And yet, there’s dancing in the street!

What street? Wall Street.

CNBC reports traders are giddy on the floor of the New York Stock Exchange. Champagne corks will be popping all over Manhattan this afternoon and evening. Party time!  What do they know that we don’t know?

Sequestration is the beginning of Austerity, and Austerity is a boot heel on somebody’s neck.

By “somebody,” I mean the middle class and the poor, the 99 percent. Sequestration and Austerity protect the position of the top one percent. Austerity enhances the political power and preserves the wealth of a few wealthy individuals and world-class corporations.

Sequestration and Austerity, I am quite certain, will ensure that the transfer of wealth continues,  or even accelerates.

Sequestration or no sequestration, international corporations are awash in cash, more cash than they know how to invest. Unemployment is high and going up, which will have the effect of holding wages stagnant, or pushing wages lower. Corporations and investors quite clearly are expecting higher profits and even higher stock prices.

I have said here that sequestration is “not the end of the world.” It’s possible that sequestration will have some positive effects on the U.S. budget. Specifically, sequestration will be the first attempt in a long time to rein in the out-of-control defense budget. The cost of two wars (charged to the credit card) and U.S. military power around the world is the root cause of U.S. debt.

“Not the end of the world” is not an endorsement of sequestration. I repeat, sequestration is Austerity.  (See also: “Austerity Is The New Name For Slavery” and “Austerity Is A Lead Brick In Elections.”)

We need to drastically reduce defense spending. Hopefully we can redirect most of the savings to needed spending on education, infrastructure, health care, research, economic development, worker training.

Long story short, sequestration and austerity is stealing from the poor to enrich the wealthy. Just my opinion. What do you think? Differing opinions are welcome.

— John Hayden

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3 Comments

Filed under Debt crisis, Economy, News

3 responses to “Sequestration In America, Dancing On Wall Street, Pain In Maryland And Virginia

  1. I think you’re right, John. I object to sequestration being “dumb cutting” (across the board) instead of targeted, considered choices. Cutting spending also isn’t the only way to address excessive deficits. A lot of revenue increase would be possible with tax reforms like eliminating exemptions and corporate welfare.

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  2. A little bit of pruning can promote future growth. I suspect the cuts to discretionary domestic spending can be managed, if administrators are given authority to enforce the cuts sensibly. But the key words regarding pruning are “a little bit.”

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  3. Pingback: Corporate Profits Have Soared While Workers’ Wealth Declined « GoodOleWoody's Blog and Website

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