Representative Conyers needs our Support to Kill the Sequestration’s Austerity

By William K. Black

We have been strangling the economic recovery through economic incompetence – and worse is in store because President Obama continues to embrace (1) the self-inflicted wound of austerity, (2) austerity primarily through cuts in vital social programs that are already under-funded, and (3) attacking the safety net by reducing Social Security and Medicare benefits.  The latest insanity is the Sequester – the fourth act of austerity in the last 20 months.  The August 2011 budget deal caused large cuts to social spending.  The January 2013 “fiscal cliff” deal increased taxes on the wealthy and ended the moratorium on collecting the full payroll tax.  The Sequester will be the fourth assault on our already weak economic recovery.  We have a jobs crisis in America – not a government spending crisis and the cumulative effect of these four acts of austerity has caused a certainty of weak growth and a serious risk that we will throw our economy back into recession.  The Eurozone’s recession – caused by austerity – greatly adds to the risk to our economy because Europe remains our leading trading partner.

President Obama and a host of administration spokespersons have condemned the Sequestration, explaining how it will cause catastrophic damage to hundreds of vital government services.  Those of us who teach economics, however, always stress “revealed preferences” – it’s not what you say that matters, it’s what you do that matters.  Obama has revealed his preference by refusing to sponsor, or even support, a clean bill that would kill the sequestration threat to our Nation.  Instead, he has nominated Jacob Lew, the author of the Sequestration provision, as his principal economic advisor.  Lew is one of the strongest proponents of austerity and what he and Obama call the “Grand Bargain” – which would inflict large cuts in social programs and the safety net and some increases in revenues.  Obama has made clear that he hopes this Grand Betrayal (my phrase) will be his legacy.  Obama and Lew do not want to remove the Sequester because they view it as creating the leverage – over progressives – essential to induce them to vote for the Grand Betrayal.

Further evidence of Obama’s continuing support for the Sequester was revealed in an odd fashion today.  Bob Woodward is in a controversy because of his column about Sequestration.  His column made two primary points.  First, the administration authored the Sequester.  Second, Woodward claimed that Obama was “moving the goal posts” by asking for revenue increases.  Woodward was criticized by many Democrats for this column and created a further controversy by saying that the administration threatened him.  It turned out that the purported threat was based on a statement by Gene Sperling, Obama’s economics advisor.  David Weigel’s column summarizes the dispute.

Weigel comes out where I do on each of the three issues.  Yes, the administration created the Sequester and has fought to keep it alive when Republicans tried to kill it.  (The Republicans “started it” by their obscene extortion in 2011 in which they threatened to force a default.)  No, Obama has not moved the goal posts.  No, Sperling did not “threaten” Woodward.  I raise this background simply to provide a context for Sperling’s comments about the reasons that the administration created and continues to support the Sequester.

“The idea that the sequester was to force both sides to go back to try at a big or grand bar[g]ain with a mix of entitlements and revenues (even if there were serious disagreements on composition) was part of the DNA of the thing from the start. It was an accepted part of the understanding — from the start. Really.”

There may have been big disagreements over rates and ratios — but that it was supposed to be replaced by entitlements and revenues of some form is not controversial. (Indeed, the discretionary savings amount from the Boehner-Obama negotiations were locked in in BCA [Budget Control Act of 2011]: the sequester was just designed to force all back to table on entitlements and revenues.)

Obama continues to want to “force” a “grand bargain” in which he proposes to make large cuts to social programs, some tax increases, and reductions in the safety net.  Again, Obama can easily break with this strategy of choking our economic recovery by supporting a clean bill that would kill the Sequester instead of our economy.

The good news is that Representative John Conyers has made the Obama’s task simple by sponsoring exactly that clean bill in the one sentence form many of us have been urging: “Section 251A of the Balanced Budget and Emergency Deficit Control Act of 1985 is repealed.”  Amen.

I propose that we launch an effort, open to all, to support Conyers’ bill and demand that our representatives in the House and the Senate promptly enact it.

27 Responses to Representative Conyers needs our Support to Kill the Sequestration’s Austerity

  1. Sunflowerbio

    Bill, can you briefly describe what Section 251A is supposed to do? Thanks.

    • Sunflowerbio, I haven’t yet found a complete text of the “Balanced Budget and Emergency Deficit Control Act of 1985” on the Internet. However, I’m pretty confident that Section 251A is codified in its entirety (and as subsequently amended) as 2 USC 901(a), which our tax dollars and dedicated Federal civil servants make available to us here: http://www.gpo.gov/fdsys/pkg/USCODE-2011-title2/html/USCODE-2011-title2-chap20-subchapI-sec901a.htm . The parenthesized source note at the end, “Pub. L. 99–177, title II, §251A” leaves me confident that this is The Whole Story of Section 251A; “PL 99-177” is the official name for the BBEDCA-1985, to coin a catchy title.

  2. Instead of worrying about a LAW, why not start worrying about violating the constitution? Actually, this argument applies better the next debt ceiling standoff.
    The 14th Amendment AND original Article VI of the constitution both specify that the U.S. will honor its debts (the latter applied to debts under the Articles of Confederation, but it still establishes a strong precedent). If Congress will not authorize the money for this to happen (through a debt ceiling certainly, but MAYBE through sequestration too, if specific programs are not specified for cutting), than the president must proceed to pay for programs the Congress has previously authorized on his own. He cannot pick and choose what to fund and what not to fund; that is Congress’ job.
    So, the president should direct Treasury – a part of the Executive Branch – to produce U.S. Notes – debt-free money first issued under Lincoln, and continued in circulation until 1996 – to pay all bills not covered by existing revenues. Even Jack Lew should be able to manage this simple act.

  3. MoveOn has some protests today at Congressional Offices in support of Conyers Bill:

    http://civic.moveon.org/sequester/?l_id=552748&id=63502-22126066-jR2Gsax&t=2

  4. Unfortunately the MoveOn site doesn’t have a portal where you can input your own address to find the closest protest…..that link I sent was for my local Congressperson….

  5. Conyers neeeds support to pass a progressive bill in the face of the Democrat Party figurehead (Obama) running in the opposite direction as well as the bulk of the corrupt Wall Street-funded Democrat Party. Why doesn’t the Democrat Party back him on this issue? Could it be because the Democrat Party is not a meaningful people’s opposition party? Democrats are always ‘crossing the aisle’ to help pass Republican legislation, but never the other way round. Could this be because the collusive relationship between the Democrat Party and the Republican Party flows in one direction, rightward?

    It is important to emphasise our need to always include an acknowledgment and analysis of the pressing need for a critique of the US two-party dictatorship, which constantly drifts our nation’s policies ever rightward. Conyers may be a productive place to pour our immediate energies. But that also enables the corrupt Democrat Party to continue to be viewed as some sort of people’s party. Yet, it would be much more productive, in the long run, if we begin to admit the injurious nature of supporting Democrat Party ‘saviours’ (like Kucinich, mostly nominal gestures to create illusions of social conscience within the DP) instead of fighting for a truly progressive people’s opposition party, which we could work toward if we begin to fight for truly democratic elections, which facilitate, rather than keep out, alternative political party participation, which does away with the electoral college, which does away with winner-take-all voting, which evolves to implement proportional representation and ranked choice voting, so people can vote their conscience without feeling they ‘throw away their vote,’ and so on.

    Groups like MoveOn.org serve the same function, as the political posturing of people like Conyers, Kucinich, and leftist celebrities, like Van Jones and Michael Eric Dyson (who, if they were really sincere about their stuff, wouldn’t be Democrats). They’re all basically shills, for the overall support of Wall Street Obama and the corporate Democrat Party machinery. MoveOn.org doesn’t care about true democracy, or a multiparty system (rather than a two-party dictatorship), and, neither, does Conyers, Kucinich, or any other ostensibly ‘progressive’ Democrats–an oxymoronic descriptor. None of these Democrats care about the fundamental issues of class warfare against our working-class.

    So, supporting Democrats (like supporting Republicans), in the long run, insures we will have recurring and intensifying economic crises. We keep relying on isolated Democrat Party ‘saviours’ to put band-aids on a broken, captured, political party, when we should be rejecting them completely and building a people’s party, a worker’s party.

  6. We need a freeze of governement expenses. We should only maintain essential spending. After all, if it’s not essential, why are we spending money on it? Our children are drowning in debt before they are even born…

    • The debt is a complete fiction. There are 10s of trillions in uncollected, unallocated, or mismanaged opportunity money at the Federal and State levels.
      I lay it all out here:
      http://www.huffingtonpost.com/scott-baker/america-is-not-broke_1_b_1904062.html
      but there are others who have also found trillions without breaking a sweat. See also here:
      http://www.huffingtonpost.com/lloyd-chapman/government-sequestration-fiscal-abuse_b_2781884.html
      The media is ignorant.
      Politicians are clueless or liars, bought and owned in either case.

    • Shanna, if you sincerely believe this, you need to educate yourself immediately.
      Read this free pdf book, or download it for free this weekend for your Kindle on Amazon:
      http://moslereconomics.com/2009/12/10/7-deadly-innocent-frauds/

    • Our children are not drowning in debt, though that is what we are told. Our government can print its own money without ever borrowing. It should have never borrowed in the first place. After all, if you could print your own money out of thin air like the government ( in other words counterfeiting was not illegal for you) would you ever need to borrow? If you needed a new car, would you borrow the money from a bank, or would you just print it and pay for the car? The government could print 16 trillion dollars tomorrow and pay off the debt. Everyone the government owed would have to take dollars instead of IOU’s.

      So don’t ever buy this myth that the government is out of money and that our children are drowning in debt. Instead of printing money debt free, we borrow our money from the banks, because the banks captured Congress 100 years ago. What needs to change is that the government needs its printing money power back, the power it gave to the banks in 1913 with the Federal Reserve Act.

      • I’ll just say ditto to what David Mills said. Lincoln produced the first legal tender act in 1862, which also gave us our first and only (except for the important exception of coins), debt-free money, a form of currency that was officially in circulation until 1996, and which two Congressmen tried to revive – LaHood (HR1452 in 1999 and agian in 2004), and Kucinich (HR2990 in 2012).
        You can read more details here: http://www.huffingtonpost.com/scott-baker/america-is-not-broke_1_b_1904062.html
        as well as 4 other multi-trillion dollar solutions to raise money that are tried, proven and constitutional, or at least just matters of simple but extensive accounting.
        We’re not Europe – we, so far, have a sovereign currency, IF we reclaim that right from the private FRB.
        We are undercollecting economic rent – more trillions.
        We have trillions more in the state and federal CAFR accounts.
        We have yet more hundreds of billions, if not trillions, if we switch to public banking for public credit for the states, like the bank of North Dakota
        There are another $30 trillion or so in offshore accounts, untaxed.
        And there’s much more where that came from.
        The media is cowed, bought, and just plain stupid. Politicians are even worse, because they simply lie too.
        Don’t fall for the trap.
        Conyers work is admirable, but he is just scratching the surface of what’s possible. He actually knows this, because he was the co-sponsor of Kucinich’s bill to bring back debt-free U.S. Notes.

        • davidgmills

          Not only that, Scott, in the legal tender cases, a/k/a the greenback cases, the Supreme Court was faced with the question of whether Lincoln’s greenbacks were constitutional. The Supreme court held they were on two major grounds. First the Supreme Court said that Article I, Section 8 which gives Congress the power to “coin money” was synonymous with printing paper money. The second reason given was that printing paper money was part of Congress’ war powers, because printing this money during the civil war was a necessity for Lincoln when he could not borrow from the banks at any reasonable interest rates.

          The supreme Court also noted that in contrast to Article I, Section 8, Article I, Section 10 prohibits the states from coining money or emitting “bills of credit.” (This is why there is no such thing as a New York dollar). Bills of credit are essentially paper money that sovereigns print, usually to use for paying taxes. Congress was not prohibited in Article I, Section 8 from emitting bills of credit. So one of the arguments was also that since Congress was not prohibited from emitting bills of credit and since the states were, the implication is that Congress could emit them.

          The point of all this is that the Supreme Court has held that it is Constitutional for the Congress to print paper money. We should do it. It is what many of the great framers, like Franklin, Jefferson and Madison wanted it to do. They were extremely concerned about bankers having a monopoly or near monopoly on printing money out of thin air.

          I think also Kennedy issued US treasury notes, some 4+ billion worth. After his assassination, steps were taken to remove them from circulation, just as most of Lincoln’s greenbacks were removed from circulation shortly after his assassination.

          • Yes, the last of the legal tender cases, Julliard v. Greenman in 1884, established the right of Congress to “coin Money” (capitalization in the original, and significant for reasons given by Natelson in his paper on the Coinage Clause: http://www.economicstability.org/history/the-coinage-clause-in-the-constitution – this is a must read for any serious student of Art. 1, Sec. 8), by an 8-1(!) decision.
            Kennedy attempted to issue Silver Certificates from the U.S. Treasury. He was assassinated 5 months later and this was never brought up again.

            • Thank you for the reference. Excellent article. Bookmarked.

              Two observations.

              First, I really like to see the argument made that the original intent of the ratifiers was as important if not more important than the framers; after all, the ratifiers voted on the Constitution. I have often made the point that the Constitution was probably ratified due to its ambiguity and it meant different things to different voters.

              Second, my only criticism of the article is that the author was apparently not aware of the English tally stick system that was England’s basic money from 1100 and which stayed in circulation till about 1820. This money was made of sticks of wood. A stick had notches in it and was split in two and had the royal seal. The monarchy kept one of the split pieces and the other half was spent into the general circulation. The value was determined by the length of the stick and by the number of notches. The sticks in circulation could be used to pay taxes. The British Empire was built on this system. This system was used as the main system when England was gold and silver poor (before they got gold and silver from their colonial pursuits primarily in the new world). The tally stick system was probably well known to the colonists and thus it would have had a bearing on what they considered coining money to be. Especially since wood and paper are both made from trees or plant substances and paper is just processed a bit more.

      • Mark robertson

        Davidgmills says, “Our children are not drowning in debt, though that is what we are told. Our government can print its own money without ever borrowing.”

        Then Davidgmills says, “Instead of printing money debt free, we borrow our money from the banks, because the banks captured Congress 100 years ago.”

        Therefore our children are indeed drowning in debt (to the banks).

        Look…there are two ways that money enters the U.S. economy. (There would be three if we had a trade surplus instead of a trade deficit.) One way is government spending. The other way is bank lending. If you insist that there is only bank lending, then you wallow in self-contradictions like the one above.

        • That’s actually not true. There’s a third way, as both me and David have pointed out – direct issuance of debt-free money. Yes, the double-entry accounting methods have to be superseded, and the American Monetary Institute has addressed that, among others, but this is not a Natural Law.
          As we’ve said the constitution, precedent under Lincoln and beyond, and even SCOTUS, have all upheld this ability. That our elected leaders choose not to utilize it and instead just put us into deeper debt, or kill the economy with Austerity, just shows how corrupt or institutionally captured they are – and THOSE are the real places there are only two choices, not in monetary opportunities.

        • Our children are drowning in debt at the moment but it is not a permanent or a real condition. If tomorrow the President were to have the treasury print 16 trillion dollar coins and insist upon a swap of the coins for the debt, then our children’s debt is gone tomorrow. Knowing that is the case, is the debt real?

          • Tristan Lanfrey

            Do you have a contract that says your children (or my yet unborn children) owe money to anyone? Have you taken a loan on their behalf?

  7. John Q. Public

    Why yes, utopia lies just the other side of an elected governing body. Of course! Do away with any all legal frameworks and enjoy the freedom. Why basketball without referees! Baseball without those pesky rules or umpires! What is more fun than a game without anyone tostop cheaters or adjudicate disputes? Ah, perfect blance and equity.

    • John Q., your comment makes me wonder if my monitor is broken. I can’t seem to find anything on my screen vaguely like what you’re sarcastically condemning.

      Trying to ensure that the 1/4 to 1/5 of our fellow citizens who are un- or under-employed have a shot at a productive job with a living wage for is surely a step toward the human decency that our Nation claims to promote — not to mention social and economic stability for all of us — but I’d hardly call it Utopia.

      Repealing the arguably unconstitutional 2 USC 901(a) is hardly “baseball without referees”. It might be closer to repealing a rule that requires the Umpire to terminate the game when the scoreboard shows a total of, oh, let’s say, 19 runs (Whoops, gotta call the game even before the 7th inning stretch! We’re out of points!).

      And as for a elected governing body with perfect balance and equity, suggesting that we might get a bit closer to that ideal by having a party at the table that is not bought and paid for by our most monopolistic enterprises and the .01% of the population that serve as their viceroys seems to me to be more a question of urgent self-defense than an unattainable and theoretical idealism.

      • John Q. Public

        I meant to reply to Shanna. As a blue collar worker I was told by my fellows that the sequester was a great blow for us, the working middle class. This ignorance was seconded and spewed all day. Also to hear the lies told by ‘economists’ on NPR, that austerity is good for USA’s current recovery, Egypt needs to accept IMF loans and make hard austerity choices to recover, made my patience short. Then to see a comment such as this in my oasis of sanity caused me some grief. The sarcasm, yes, was uncalled for.

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