The consequences of inaction are severe

Mar 1, 2013 Issues: Economy

 

Children, the unemployed most harmed by federal spending cuts going into effect today

The effects of the sequestration may not reveal themselves in a matter of hours, or even days. But make no mistake: Inaction has consequences. Washington is frozen in place because of the unwillingness of Republicans in Congress to even discuss a balanced replacement. For them, it is cuts and nothing else.

The nonpartisan Congressional Budget Office estimates that economic growth will be reduced by 30 percent because of the arbitrary cuts, erasing several months of job gains and raising our unemployment rate back above 8 percent.

Sequestration's economic pain has been plain for all to see coming. Economists have warned about its effects since it was created 19 months ago as a mechanism to force Congress to come to a bipartisan deficit reduction deal. In fact, its effects would be so harmful to such a broad swath of the nation, the thinking went when it was set up, that no one would want to risk allowing it to take place.

The last several weeks have proven that hypothesis wrong. Republican after Republican has emerged since January to claim that sequestration is just what our nation needs.

"It is going to be a home run," one Republican Congressman, Mike Pompeo of Kansas, said at an event I attended in February. The response from another, Cynthia Lummis of Wyoming: "I am excited."

That excitement won't be felt by the tens of millions of Americans who will experience the impact firsthand.

Without action, in Michigan 10,000 defense employees will be furloughed, the families of 2,300 children will see their Head Start or Early Head Start services eliminated, and more than 70,000 unemployed Americans will see their unemployment insurance checks cut by 10 percent.

A solution should not be out of reach. The vast majority of Americans believe in the central premise of a potential replacement: Balance.

We should replace the cuts with spending cuts and revenue, gained by closing tax loopholes that should never have been part of the tax code.

One, the so-called carried interest loophole, allows private equity managers to pay taxes at a vastly lower tax rate — capital gains rate instead of ordinary income rates — for income earned managing other people's money.

Another loophole for years has enabled the Big Five oil and gas companies, which earned a combined $100 billion in profits last year, to take advantage of a manufacturing tax incentive that was never intended for them.

Republicans in Congress, however, have steadfastly opposed any additional revenue — through closing loopholes — to replace sequestration.

Their rigidity on the issue comes even as stagnant wage growth for the middle class and increasing incomes for the very wealthy have exacerbated America's deepening income inequality.

If the November election provided a referendum on anything, it did so on the concept of a balanced approach to solving our nation's deficit problems. The months since have only cemented that opinion. Some three-quarters of Americans told pollsters at the Pew Research Center last month that they believe we need a combination of both spending cuts and revenue to reduce the deficit.

Americans should not have to suffer because Republicans in Congress refuse to listen to them.