Woodward: Idea For "Draconian" Defense Cuts "Originated In The White House"

ARRA News Service - Warning:
Crippling Defense Cuts - Sequestration

Today in Washington, D.C. - Sept. 17, 2012:
The Senate is not is session but reconvened for a pro forma session today and return for legislative business on Wednesday. On Wednesday, the Senate will vote on a motion to waive the Budget Act with respect to the Murray substitute amendment to S. 3457, the Veterans Jobs Corps bill. If the motion to waive is agreed to, the Senate will vote on cloture (to cut off debate) on the Murray substitute amendment and then adoption of that amendment if cloture is invoked.

Later Wednesday, the Senate will vote on cloture on the motion to proceed (i.e. whether to take up) H.J. Res. 117, the House-passed six-month continuing resolution (CR) to fund the government.

The House is in recess until noon on Tuesday. On Friday the House passed H.R. 6213 (245-161) - "To limit further taxpayer exposure from the loan guarantee program established under title XVII of the Energy Policy Act of 2005." and S. 3552 (unanimous consent) - "To reauthorize the Federal Insecticide, Fungicide, and Rodenticide Act." Session ended at 3:18 p.m. but many members of Congress were already on their way to their home states.

At the end of last week, the Obama administration finally released its report (a week late) on the huge cuts to defense that sequestration will impose in January. CNN Money noted, “[T]he scheduled defense cuts would reduce the readiness of many non-deployed units, delay investments in new equipment and facilities, cut back on needed repairs and reduce services for military families. Top defense officials have warned that further cuts to defense could hurt national security. And defense contractors have been saying for months that the cuts could result in significant layoffs in their industry.”

It’s worth pointing out that it didn’t need to be this way, but the Obama White House was insistent on including major “draconian” cuts to defense accounts in last year’s budget negotiations. Politico reported earlier this month, “The book ‘The Price of Politics,'’ by Washington Post Associate Editor Bob Woodward, makes it clear the idea for the draconian spending cuts originated in the White House – and not in Congress.” Woodward wrote in his book, “‘Well, it could work, [then Office of Management and Budget Director Jack] Lew and [White House Legislative Affairs Director Rob] Nabors explained. What would the impact be? They would design it so that half the threatened cuts would be from the Defense Department. ‘I like that,’ [Democrat Senate Majority Leader Harry] Reid said. ‘That’s good.’”

Responding to Friday’s report, Senate Republican Leader Mitch McConnell said, “The release today of a report detailing across-the-board budget cuts — including the cuts to national security that the President demanded during last year’s budget negotiations -- highlights the crippling effect these reductions will have on our nation’s security and underscores the urgent need for the President to work with congressional Republicans to replace these destructive cuts. Although the sequestration report lacks detail, it makes glaringly clear that those programs most closely related to combat readiness of the force will be severely cut. And while the report claims that the President has offered ‘balanced and comprehensive deficit reduction’ solutions, his plan was so unserious that it was rejected by every single member of Congress.

“Sadly, it took passage of the Sequester Transparency Act to force the Obama administration to tell the American people what programs will be affected by these cuts. The President’s own defense secretary has said these cuts would hollow out our Armed Forces, yet the President refuses to join Republicans who want to responsibly replace them before they go into effect. The defense cuts that will be triggered under the sequester are in addition to the $487 billion in cuts to the Defense Department identified by Secretary Gates. The President needs to provide the leadership to avoid these reductions that will render his own strategy unsustainable.”

Last week the Federal Reserve announced its new round of quantitative easing.  CNBC senior editor John Carney notes that “no other central bank has launched a quantitative easing program with such an explicit link to jobs.”  ALG President Bill Wilson responded,

"[B] based on the past performance of its prior $2 trillion of quantitative easing (QE), it is hard to imagine just how another $480 billion a year of printing money is going to spur a real jobs recovery. . . . Lest there be any doubt, deposits held by Federal Reserve banks on behalf of financial institutions have exploded from $13.4 billion in 2007 to more than $1.5 trillion today. If QE1 and QE2 were responsible for creating jobs, then why is most of it still sitting in a vault? . . . Since Aug. 2007 when the financial crisis is thought to have begun, the Fed has increased its balance sheet from $897 billion to $2.805 trillion today, more than tripling it.

"But since that time, the economy has lost 3.5 million jobs according to data compiled by the Bureau of Labor Statistics. Overall, in this recession, a net 4.3 million jobs have been lost. To be fair, the quantitative easing portion of the Fed’s program did not begin in earnest until Sept. 2008.  Up until that point the Fed had mostly been slashing interest rates. But even from that point forward, the economy still has lost 2.9 million jobs. In fact, the economy kept shedding jobs until Jan. 2010. By that time, some 8 million jobs had been lost, and the Fed was already $908 billion deep into its $1.25 trillion of mortgage-backed securities purchases. . . .

"[E]xactly one-third of all purchases the Fed made of mortgage-backed securities in QE1 went to Europe. If the same pattern holds true for its $480 billion annual dose of QE3, another $158 billion will be transferred to these European banks — every year. In that respect, QE3 is just another backdoor bailout for European banks so they can afford to continue purchasing their own countries’ debts. That is the real truth. Whether it is funding U.S. deficit spending through treasuries purchases or propping up foreign banks to do the same, the public should understand that QE3 has nothing to do with creating jobs, and everything to do with financing failed big government experiments all over the world."

---

Tags: Washington, D.C., sequestration, defense reductions, cuts, defense jobs, layoffs, National Security, Fed, quantitative easing, QE, European Banks, bailout To share or post to your site, click on "Post Link". Please mention / link to the ARRA News Service. Thanks!